Oil prices drop as Pakistan announces US-Iran deal

Oil prices fell in early Asian trading after Pakistan, which has been mediating efforts to end the US-Iran war, announced a deal that US President Donald Trump said would lead to the reopening of the Strait of Hormuz.

Brent crude, the global benchmark, dropped 3.8% to $84.02 a barrel. US crude fell 4.1% to $81.40 a barrel, the BBC reports.

Pakistan’s Prime Minister, Shehbaz Sharif, said an official signing ceremony would take place in Switzerland on June 19. Trump later said on social media that oil shipments would resume.

The Strait of Hormuz has been effectively closed since shortly after the US and Israel launched air strikes on Iran on February 28.

Tehran had threatened to target vessels using the strategic waterway, through which about 20% of global oil and liquefied natural gas exports normally pass.

Energy markets have experienced sharp swings in recent months as investors reacted to developments in the conflict involving the US, Israel and Iran.

Brent crude, which traded at about $70 a barrel before the war began, climbed to around $120 during the conflict before retreating following news of the agreement.