Photo caption: Cargo ships in the Gulf, near the Strait of Hormuz, as seen from northern Ras al-Khaimah, near the border with Oman’s Musandam governance in United Arab Emirates, March 11, 2026. REUTERS/Stringer/File Photo Purchase Licensing Rights
*US, Iran sign MOU on peace deal, Trump says
*Deal includes reopening of Strait of Hormuz
*Talks on final agreement expected in next 60 days
Oil prices slumped around $4 a barrel to a three-month low on Monday amid a broad selloff after President Donald Trump said the United States and Iran have signed a memorandum of understanding aiming to end the Iran war and reopen the Strait of Hormuz.
Reuters reports that Brent crude futures fell $4.11, or 4.71%, to $83.22 a barrel by 1:30 p.m. EDT (1730 GMT) and U.S. West Texas Intermediate was at $80.54, down $4.34, or 5.11%. Both contracts fell to their lowest levels since March 10 on Monday after tumbling more than 3% on Friday. WTI futures fell as much as $5 during the session.
The memorandum of understanding has been signed by Trump and Vice President JD Vance and Iranian parliament speaker Mohammad Bagher Qalibaf, one U.S. official said.
An official signing ceremony for the agreement is due to be held on Friday in Geneva.
Iran’s semi-official Mehr news agency said the draft deal called for reopening the Strait of Hormuz within 30 days under Iranian arrangements.
“With a wall of oil supply very possibly on the way, the selloff looks justified,” said Dennis Kissler, senior vice president of trading at Bok Financial.
Iran lowered the official selling price for its light crude oil grade for Asian buyers to $7.15 a barrel above the Oman/Dubai average for July, the state-owned National Iranian Oil Company said on Monday, compared with the previous month’s premium of $13 a barrel.
The world has lost millions of barrels of oil and gas supply since the war closed the Strait of Hormuz, a chokepoint for a fifth of the world’s oil and liquefied natural gas supplies, for more than three months. It is unclear how quickly those barrels will return to market once the waterway is opened.
“Getting the vessel supply chain in place and the restarts all running smoothly within the Arab Gulf will be tough. And some vessel owners will be hesitant to ballast towards the Arab Gulf until we hear from insurers,” said Neil Crosby, head of research at Sparta Commodities.
Investors are also watching cautiously how quickly Middle Eastern producers can resume oil production and exports following damage from the war, and whether more ships will enter the region.
More than 14 million bpd of oil output is shut, or about 14% of world demand, according to the International Energy Agency’s . A full return to pre-war production and refining levels is likely to take weeks, months or even years, industry officials say.
Lower oil inventory levels, a slower process to restart production and the refilling of strategic oil inventories should support oil prices in the longer term, UBS analyst Giovanni Staunovo said.
Stockpiles in the world’s largest economies are headed toward their lowest levels since at least 2003, due to the lost Gulf output, according to the U.S. Energy Information Administration.
“If we look at the pre-war range being around $60 to $70 in Brent, I would expect that the new price floor has moved higher from 60 back in the December/January window, perhaps as high as $75 or $80 going forward, with some risk to the upside,” Saxo Bank analyst Ole Hansen said.
Israeli Defense Minister Israel Katz said the military would remain in security zones in Lebanon, Syria and Gaza indefinitely in order to protect the border and Israeli settlements. The fate of Iran’s nuclear program, another thorny issue, will also be addressed in those later talks, sources previously told Reuters.
E4 nations, which include the UK, France, Germany and Italy, said on Sunday the countries were prepared to lift sanctions on Iran in response to steps on its nuclear program.
