Iran Deal, Oil Impact
Oil prices drop nearly 5% as Trump announces imminent Iran peace deal
Oil prices have fallen sharply on hopes that the U.S. and Iran are close to ending their war. Brent crude futures dropped nearly 5% to below $87 per barrel on June 12, according to Investing.com — the lowest level since the conflict began in February. President Trump announced on June 11 that he had cancelled planned military strikes and that a peace deal is "nearing completion."
Global stock markets rallied on the news, according to Border Telegraph. Traders are betting that a deal will reopen the Strait of Hormuz — a narrow waterway that carries 20% of the world's seaborne oil. The Strait has been largely blocked since Iran closed it in March, sending crude prices above $100 per barrel.
From "Very Hard Tonight" to Peace Deal in Hours
The reversal happened fast. On the morning of June 11, Trump threatened to hit Iran "VERY HARD TONIGHT" and floated the idea of seizing Iran's Kharg Island oil terminal, according to Rigzone. By that afternoon, he posted on Truth Social that strikes were cancelled. "I don't know if you heard, but we ended the war with Iran today," Trump said, as reported by Daily Post Nigeria.
The conflict itself started on February 28, when the U.S. and Israel launched coordinated strikes on Iranian nuclear and military sites. A ceasefire brokered by Pakistan took hold in April. Tensions flared again on June 10 after U.S. forces struck the MT Settebello, a tanker in the Gulf of Oman, killing three Indian sailors, according to Investing.com.
The Deal's Key Terms — and Its Biggest Sticking Point
The agreement under discussion includes a 60-day ceasefire extension and a pledge from Iran to bar nuclear weapons development, according to XTB.com. It would also lift the U.S. naval blockade, which Trump has called "the most successful blockade in the history of naval warfare." U.S. Vice President JD Vance is expected to lead the American delegation to Europe for a formal signing ceremony this weekend.
Iran's enriched uranium stockpile remains the biggest hurdle. Iran's semi-official Fars News Agency said a deal has a "high probability" but that "final approval from the Supreme Leader has not yet been issued," per XTB.com. Lead U.S. negotiators Steve Witkoff and Jared Kushner developed the deal's framework through back-channel talks in Qatar and Oman.
Skeptics Warn the Deal Could Still Fall Apart
Not everyone believes the war is over. ING analysts warned, "We would be cautious about assuming that the extension of the ceasefire is a done deal," adding that if nuclear talks stall, the situation "could very easily fall apart," according to Investing.com. House Speaker Mike Johnson also told colleagues "not to put too much stock in the details right now," per Fox News.
Analysts at the Institute for the Study of War say Iran may be using the peace talks to delay progress on its nuclear program while keeping its influence intact in Lebanon. Tehran's state media, meanwhile, frames Trump's cancellation of strikes as a U.S. "climb down" — a framing designed to help Iranian leaders sell the deal at home.
What a Deal Would Mean for Oil Prices Worldwide
If the Strait of Hormuz fully reopens, analysts say Brent crude could fall back toward $70 per barrel — the level before the war began — according to Daily Post Nigeria. That would cut fuel costs for consumers and ease inflation pressures across the global economy. Haris Khurshid, a Chicago-based investment chief, said "the market is increasingly betting that both sides ultimately have more to lose from failure than compromise," per The Straits Times.
For Iran, a deal brings urgently needed sanctions relief after months of war and a naval blockade. For Trump, it would be a marquee foreign policy win. Markets are also riding a broader wave of optimism: SpaceX debuted on the Nasdaq on June 12 at a $75 billion valuation, adding to a "risk-on" mood among investors, according to XTB.com.
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