Oil prices dropped sharply on Friday after Iranian state media reported a proposed peace deal that could see the Strait of Hormuz reopen to normal traffic.
U.S. crude oil futures for July delivery fell 4.5% to $83.80 per barrel as traders reacted to news of a potential diplomatic resolution.
August futures for international benchmark Brent crude lost 4.4%, settling at $86.45 per barrel amid growing optimism over the proposed agreement.
The reported deal centers on a 14-point document that includes a commitment from Iran to reopen the Strait of Hormuz within 30 days of the agreement taking effect.
Under the terms outlined by the Mehr News Agency, the U.S. would be required to lift oil sanctions and withdraw American forces from Iran as part of the accord.
President Donald Trump weighed in Thursday, saying that the U.S. made a “great settlement of the war with Iran,” lending the White House’s apparent endorsement to the emerging framework.
Oil prices had surged roughly 30% since the U.S. and Israel attacked Iran on Feb. 28, triggering a severe and prolonged disruption to global energy markets.
Tehran retaliated by attacking tankers in the Strait of Hormuz and mining the critical sea lane, causing traffic through the passage to plunge and sparking what analysts have called the biggest oil supply disruption in history.
BMO Capital Markets noted that oil prices have remained surprisingly contained despite the recent fresh exchange of U.S.-Iran strikes, citing ongoing diplomatic efforts, alternative shipping routes, and sharply lower Chinese crude imports as offsetting factors.
Oil industry executives and analysts say crude prices have remained moderate relative to the scale of the disruption, largely due to the buffer provided by global stockpiles built up before hostilities escalated.
However, analysts warn that prices will likely spike later in 2026 as inventories rapidly decline at the same time summer demand hits its seasonal peak.
The Strait of Hormuz remains one of the world’s most strategically vital energy chokepoints, with a significant share of global oil exports transiting the waterway under normal conditions.
