Crude prices plummet to their weakest level since tensions escalated between the US and Iran.

Oil prices plummeted on Thursday, reaching their lowest point since the US-Iran conflict began, as a ceasefire deal alleviated concerns over global crude supply, with Brent crude futures and US West Texas Intermediate crude both experiencing significant declines.

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Brent crude futures dropped by $1.53, or 1.9 per cent, to $78.02 per barrel as of 1326 GMT, while US West Texas Intermediate crude fell $2.22, or 2.9 per cent, to $74.57 per barrel, according to Reuters.

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The decline in Brent crude marked its lowest level since the initial US-Israeli strikes on Iran, while US West Texas Intermediate crude hit its weakest point since early March, with market sentiment driven by expectations of increased Iranian oil exports.

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A 14-point memorandum of understanding signed by Washington and Tehran aimed at de-escalating tensions sparked the market's reaction, with IG market analyst Tony Sycamore noting that the selloff extended as energy markets priced in a faster-than-expected return of Iranian barrels.

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The agreement initiated a 60-day negotiation period, during which Iran will allow toll-free passage through the Strait of Hormuz, a critical oil and gas shipping route, with the deal also envisioning the restoration of traffic through the waterway to full capacity within 30 days.

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Analysts anticipate a gradual recovery in oil flows through the Strait of Hormuz, although industry experts caution that prices may not collapse significantly due to resilient global demand and the need to replenish inventories.

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Goldman Sachs projects that Gulf oil exports will return to pre-conflict levels by the end of July, with crude production expected to recover fully by October, estimating that normalisation could add about 13 million barrels per day in Hormuz flows.

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The investment bank's estimates suggest that this would restore volumes to roughly 70 per cent of pre-war levels, although BNP Paribas does not expect oil prices to return to pre-conflict levels, citing persistent supply constraints and firm demand.

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BNP Paribas sees $75 per barrel as a "durable floor for the foreseeable future", despite the recent decline in oil prices, due to the ongoing supply constraints and strong demand in the market.