Crude oil costs plummet after Trump agrees to pact to resume Hormuz operations

US President Donald Trump spoke to the press before boarding Air Force One at John F. Kennedy International Airport in New York on June 9, 2026, as he returned to the White House after attending Game Three of the NBA Finals.

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Trump's trip followed a significant development in his presidency, as oil prices plummeted on Thursday after he and his Iranian counterpart signed a deal to end their war and reopen the Strait of Hormuz.

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The agreement sparked optimism for a lasting peace between the two nations, which have been embroiled in a war that has rattled energy markets and fueled inflation for over three months.

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However, the positive mood on trading floors was tempered by expectations that the Federal Reserve will hike interest rates before the end of the year, following a policy meeting led by its new boss.

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The Federal Reserve's new boss acknowledged that "persistently high prices are a burden for the American people" during his first policy meeting, which led to speculation about potential interest rate hikes.

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Trump signed the memorandum of understanding in Versailles after the G7 summit, and Iranian Foreign Ministry spokesman Esmaeil Baqaei confirmed that the document was finalized with the signatures of the presidents.

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The agreement will see the US commit to immediately waiving oil sanctions and facilitating the release of a $300 billion reconstruction fund, while Iran agrees to dilute its enriched uranium as talks on a longer-term agreement are held.

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Pakistan Prime Minister Shehbaz Sharif, whose officials mediated the agreement, stated that the Islamic Republic of Iran will instantly reopen the Strait of Hormuz and the US will lift its naval blockade as a first step.

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Crude oil prices fell by more than one percent on Thursday, extending the losses sustained since news of the agreement broke, with both main contracts plummeting over 15 percent since last week.

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Analyst Stephen Innes at SPI Asset Management noted that the signed memorandum of understanding and the faster path toward reopening the Strait of Hormuz should reduce the panic premium in crude oil prices.

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Equities were mixed, with some markets struggling to maintain the positive momentum seen earlier in the week, following the Federal Reserve's latest policy meeting, which saw it hold rates as expected but indicate potential hikes in the next six months.

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Markets in Tokyo, Seoul, Singapore, Taipei, and Manila rose, while those in Hong Kong, Shanghai, Sydney, Wellington, and Jakarta fell.

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New Federal Reserve boss Kevin Warsh, appointed by Trump, flagged the fact that inflation has been above the bank's two percent target for years and vowed to "deliver price stability" during his first policy meeting.

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Warsh also emphasized the need for wide-ranging reforms at the bank, which has faced an unprecedented assault on its independence from Trump, who has called previous boss Jerome Powell incompetent.

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Analysts pointed out that the Federal Reserve's post-meeting statement did not mention an easing bias, and the emphasis on prices rather than jobs was notable, given the current data showing inflation at a three-year high and a healthy labor market.

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National Australia Bank's Gavin Friend noted that while there is no suggestion the Fed's dual mandate has shifted away from unemployment and price stability, the emphasis appears to have shifted to the latter for now.

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Key figures around 0245 GMT showed West Texas Intermediate down 1.7 percent at $75.47 a barrel and Brent North Sea Crude down 1.4 percent at $78.42 a barrel.

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The Tokyo Nikkei 225 was up 1.7 percent at 71,052.30, while the Hong Kong Hang Seng Index was down 1.7 percent at 23,891.32, and the Shanghai Composite was down 0.1 percent at 4,103.29.

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The euro was up against the dollar at $1.1520, and the pound was up against the dollar at $1.3315, while the dollar was down against the yen at 160.58 yen.

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The euro was down against the pound at 86.50 pence, and the New York Dow was down 1.0 percent at 51,492.55, while the London FTSE 100 was up 0.1 percent at 10,508.61.