Crude oil costs plummet following historic agreement between Trump and Iran to cease hostilities

Oil prices plummeted on Thursday following the signing of an accord by US President Donald Trump and his Iranian counterpart to bring an end to the Middle East war, with the reopening of the Strait of Hormuz imminent, but a two-month period of complex negotiations still looming.

n

In a surprise move, Trump signed the agreement in bold black ink on Wednesday evening at a candlelit dinner with French President Emmanuel Macron at the Palace of Versailles, located just outside of Paris.

n

Macron, who had hosted the G7 summit, celebrated the signing as a major triumph, exclaiming "bravo" as Trump put his name to the document, which had been agreed upon earlier in the week.

n

Trump acknowledged that reaching the memorandum of understanding had been a challenging process, stating "this was not easy, I can tell you," while Iranian President Masoud Pezeshkian also signed the agreement, according to Iranian foreign ministry spokesman Esmaeil Baqaei.

n

Baqaei noted that the signing marked the beginning of a critical phase, saying "now it is time to test the implementation of the agreement," as crude oil prices fell by more than three percent on Thursday, extending losses that began over the weekend when news of the deal first emerged.

n

The accord is expected to bring an end to the US-Israeli conflict with Iran, which had been ongoing for five weeks until a ceasefire was reached in early April, and had resulted in significant restrictions on shipping in the Strait of Hormuz, leading to a surge in energy prices.

n

According to Prime Minister Shehbaz Sharif of Pakistan, who played a mediating role in the agreement, the deal will take effect immediately, and Iran will promptly reopen the Strait of Hormuz, with Sharif also signing the accord.

n

A two-month negotiating period is now underway, with all parties focused on the reopening of the Strait of Hormuz and the potential for progress in talks regarding Iran's nuclear program, which has long been a source of concern for Washington.

n

Macron praised the deal, saying it "allows for peace, the reopening of the Strait of Hormuz without tolls, and 60 days to conclude an agreement on nuclear, ballistic, and regional activities," but uncertainty remains regarding the next steps in the process.

n

Initially, the accord was expected to be signed on Friday at an exclusive resort in Switzerland by Iran's chief negotiator and parliament speaker, Mohammad Bagher Ghalibaf, and US Vice President JD Vance, but Baqaei stated that an in-person ceremony was no longer necessary.

n

However, Sharif announced that an official ceremony will take place on Friday in Switzerland, and technical talks will commence, with the accord stipulating that Washington will immediately waive oil sanctions that have crippled Iran's economy.

n

Once a final agreement is reached on Iran's nuclear program, the United States will also facilitate the release of a $300 billion reconstruction fund supported by regional nations, as outlined in the deal.

n

UN atomic agency chief Rafael Grossi stated that his organization is prepared to begin defining the "concrete steps" necessary to implement a US-Iran deal, with US officials also saying that Iran will dilute its enriched uranium stocks, possibly through "down-blending on site" under the supervision of the UN watchdog.

n

Baqaei emphasized that Iran's missile program is not part of the agreement, despite criticism from hardliners within Iran, who have described the conflict as an "imposed war" similar to the 1980-1988 conflict with Saddam Hussein's Iraq.

n

Ghalibaf characterized the deal as a US "failure," while Trump's decision to end the war, in which 13 US service members were killed and vast amounts of US ammunition were used, has been met with criticism from some of his allies at home.

n

Trump, anticipating such criticism, stated at the G7 that he was prepared to "bomb the hell" out of Iran if they violate the agreement, but US Senator Bill Cassidy from Trump's Republican Party described the deal as the "worst foreign policy blunder in decades."

n

Cassidy argued that the deal fails to curb Iran's nuclear ambitions and has taught them that threatening the Strait of Hormuz can be effective, saying "Iran's nuclear ambitions were not curbed, and they have learned that threatening the Strait of Hormuz works."

n

A potential obstacle to the deal's success is Iran's insistence that it covers Lebanon, which was drawn into the conflict when Hezbollah fired rockets at Israel on March 2 in support of Iran, despite a decline in violence in Lebanon following the announcement of the deal.

n

On Thursday, an Israeli drone strike in south Lebanon killed one person, according to Lebanese state media, and the Israeli military announced that one of its soldiers had been killed in fighting in southern Lebanon the day before, in an incident that also wounded seven soldiers.