Global Markets React as US and Iran Reach Framework Peace Deal

The United States and Iran have reached a preliminary agreement to end their recent war, offering a sign of relief to global energy markets. The conflict, which lasted over three months, caused one of the largest disruptions to energy supplies in history. By closing the Strait of Hormuz—a narrow waterway that carries about one-fifth of the world’s oil and natural gas—the fighting forced global prices for fuel to climb sharply. Following the announcement of the framework deal, the price of Brent crude, the global oil benchmark, fell to around $83 per barrel, down from a peak of $120 during the height of the conflict.

President Donald Trump shared the news on social media, encouraging ships to begin moving again. However, the reality on the water is more complex. According to BBC Business, ship-tracking data shows that traffic levels in the Strait of Hormuz remain low. While the deal is a positive step, the waterway has been closed to most traffic since late February. Hundreds of ships have been stuck in the Gulf, facing risks from sea mines and drone strikes. Shipping giants like Maersk and Hapag-Lloyd have reported that their vessels remain in the region, and they are waiting for safety assurances before moving forward.

Experts warn that even with a signed agreement, the process of returning to normal will be slow. Neil Shearing, the chief economist at Capital Economics, noted that it remains to be seen whether this deal is a temporary truce or a long-term solution. He explained that even if the route becomes safe, tankers are currently in the wrong places, and oil facilities need time to return to full production. Furthermore, the cost and availability of insurance for ships traveling through the area remain major concerns for shipping companies.

For the global economy, the impact of the war has been significant. During the conflict, countries around the world had to use their emergency oil stockpiles to make up for the lack of supply. According to the US Energy Information Administration, oil stocks fell at a rapid rate between March and May. While some countries, such as China, reduced their imports and used domestic supplies to keep prices in check, industry experts warn that these buffers are now reaching critical levels. Jorge Leon, an analyst at Rystad Energy, noted that while inventory releases provided short-term relief, they could not fully replace the lost flow from the Strait of Hormuz.

There are also political motivations behind the timing of this deal. In the United States, rising fuel prices have created a difficult situation for the Trump administration ahead of midterm elections. The Guardian reports that the deal is being presented as a victory to help lower gasoline prices for American consumers. For Iran, a gradual reopening is also seen as a tactical choice, allowing the government to maintain some influence during the upcoming 60-day negotiation period regarding its nuclear program.

Looking ahead, the path to stability is filled with challenges. The US and Iran are expected to sign the formal agreement this Friday. Following the signing, the process of clearing mines from the Strait of Hormuz will begin, which could take up to seven weeks. Even if this process goes smoothly, market observers believe that prices may stay between $80 and $90 per barrel for the rest of the year as buyers rush to refill empty emergency reserves. Additionally, while oil flows may recover by the end of the third quarter, gas exports could take longer to stabilize due to damage caused to processing facilities during the conflict.

Ultimately, while the announcement of a peace deal is a welcome development for the global economy, it is not an instant fix. The world will be watching closely to see how quickly the Strait of Hormuz can truly return to its role as a secure trade route. Until then, the global energy market remains in a state of careful recovery, with businesses and governments alike waiting for the first signs of a return to pre-war normality.