Oil prices fell to their lowest level in three months on Monday. This was the first trading day of the week. Markets reacted quickly to news of a preliminary deal that reduced geopolitical tensions and improved expectations for global supply flows.
Brent crude dropped $3.58, or 4.10%, to $83.75 per barrel. U.S. West Texas Intermediate (WTI) fell $4.00, or 4.72%, reaching $80.87 per barrel. Both benchmarks had already lost more than 3% on Friday. The decline continued into the new week.
Officials and political leaders confirmed progress on an early agreement. The deal aims to reduce conflict risks and reopen key maritime routes. These include the Strait of Hormuz, a major global energy corridor.
Pakistan’s prime minister said both sides will sign a memorandum of understanding in Switzerland. He played a mediating role in the talks. U.S. President Donald Trump also stated that restrictions on the Strait would end. He added that naval pressure on Iranian ports would stop.
An Iranian news outlet reported that the draft plan includes a 30-day timeline. It sets conditions for reopening the Strait under Iranian supervision. This announcement increased expectations of improved oil flow.
Analysts said the geopolitical risk premium is fading quickly. Tim Waterer of KCM Trade noted that traders now expect normal export flows to return.
Markets had previously lost millions of barrels due to disruptions in the region. These disruptions started earlier in the year. Investors now watch how fast production can recover in the Middle East.
Some analysts remain cautious. They say uncertainty still exists around future negotiations and energy stability. These factors could still influence prices in the coming weeks.
