Global crude oil prices continued to trade near three-month lows on Tuesday following the announcement of a peace agreement framework between the US and Iran, easing concerns over supply disruptions from West Asia.
Around 8:30 am, the August contract of Brent crude on the Intercontinental Exchange was trading at $83.10 per barrel, down 0.08%, while the July contract of West Texas Intermediate (WTI) on NYMEX stood at $80.74 per barrel, lower by 0.01% from its previous close.
Oil prices, however, recovered marginally from the lows touched in the previous session as traders awaited details of the agreement and a timeline for the full reopening of the . On Monday, Brent had fallen 5% to $82.56 per barrel, its lowest level in three months.
Deal details
In a post on X on Monday, Iranian President Masoud Pezeshkian said:
“What has been agreed upon is an important step toward stopping the war and beginning negotiations, and a final agreement has yet to take shape. The Islamic Republic of Iran has prepared itself for all options, and the government’s focus—with or without an agreement—is sincere service to the people. The Iranian nation has learned from its martyred Imam not to submit to humiliation.”
In another post, he said the “memorandum of understanding” that has been drafted is the result of months of dialogue and persistent follow-ups.
Meanwhile, wrote on Truth Social:
“Iran has agreed to never have a Nuclear Weapon! Also, the story that the U.S. is paying Iran 300 million Dollars is Fake News, put out by the Dumocrats!!!”
Hormuz questions
While the US has said no toll would be levied by Iran for transit through the Strait of Hormuz, Iran’s foreign ministry indicated on Monday that the country plans to charge maritime service fees, rather than transit tolls, on vessels passing through the strategic waterway once it reopens.
Speaking to Iran’s Tasnim news agency, foreign ministry spokesperson Esmaeil Baghaei said Tehran does not intend to impose transit tolls on ships using the strait. Instead, the fees would cover services such as navigational assistance, environmental protection measures, ship insurance and other maritime support jointly provided by Iran and Oman.
These differing interpretations have raised concerns about the deal’s implementation and the prospect of uninterrupted trade through the Strait of Hormuz, which handles roughly 20% of global oil and gas trade.
The agreement is expected to be formally signed on 19 June, according to an announcement made by Pakistani Prime Minister Shehbaz Sharif on Monday.
India impact
The announcement is positive for both the global economy and India, although concerns remain over the durability of the agreement, particularly given objections from Israeli officials who argue that the arrangement does not adequately address their security concerns.
Before the conflict, 60-70% of India’s annual crude oil imports—worth roughly $123 billion—passed through the Strait of Hormuz. Lower oil prices are beneficial for India, which imports nearly 90% of its crude oil requirements.
Though the peace deal is positive for India, much will depend on the final contours of the agreement, especially the provisions governing transit through the Strait of Hormuz, said Pronab Sen, India’s former chief statistician.