Global oil prices fell sharply on Monday after US President Donald Trump announced that the Strait of Hormuz would reopen following a peace agreement between the United States and Iran, mediated by Pakistan. Brent crude dropped 4 percent to 83.81 dollars per barrel, while US crude fell 4.7 percent to 80.89 dollars. Pakistani Prime Minister Shehbaz Sharif said the formal signing ceremony would take place in Switzerland on June 19. Iranian Deputy Foreign Minister Kazem Gharibabadi confirmed the deal on state television.

The Strait of Hormuz, a vital route for about 20 percent of the world’s oil and LNG shipments, had been closed since February 28 after US and Israeli airstrikes in Iran. Tehran had threatened attacks on vessels using the route. The conflict had previously driven oil prices as high as 120 dollars per barrel, up from around 70 dollars before the war.

Energy analysts cautioned that oil transport through the strait would not immediately return to prewar levels, citing the need to clear mines and ease tanker congestion. Asian stock markets rose sharply as investors welcomed the agreement.