Crude oil prices tumbled more than 5% on Monday morning after US President Donald Trump announced a peace agreement with Iran, including the reopening of the Strait of Hormuz. West Texas Intermediate fell to roughly $80 per barrel, while Brent crude dropped to around $83, marking a sharp reversal from recent highs driven by geopolitical tensions.
The announcement comes just days before the G7 summit in Évian, where the deal is expected to be a central topic. European markets reacted positively, with the Euro Stoxx 50 and Stoxx 600 both gaining over 1% at the open. France's CAC 40 led the charge, rising nearly 1.5%, while Germany's DAX 30, Italy's FTSE MIB, Spain's IBEX 35, the Netherlands' AEX, and Switzerland's CH20 all traded between 0.5% and 1% higher. The UK's FTSE 100 also saw gains.
Uncertainty Over Details and Regional Implications
The specific concessions made by each side remain unclear. Reports suggest the deal includes a withdrawal of Israeli troops from southern Lebanon, but Israeli Prime Minister Benjamin Netanyahu has not publicly addressed the agreement. According to CNN, Netanyahu is seeking an urgent meeting with Trump after the G7 summit. The UNIFIL deputy has warned that no quick peace is possible without political will, underscoring the fragility of the situation.
Iranian state media has also cast doubt, reporting that no final decision has been made despite optimism. The deal is currently expected to be signed on Friday, but questions linger over its durability.
Beyond Europe, Asian markets surged overnight. South Korea's Kospi jumped over 5%, recovering from a 4% drop on Friday, while Japan's Nikkei 225 rose roughly 3%. Australia's S&P/ASX 200 gained 0.8%, and Hong Kong's Hang Seng Index climbed about 0.5%. In the US, S&P 500 futures traded over 2% higher, and the tech-heavy Nasdaq 100 rose more than 3%.
The reopening of the Strait of Hormuz, a critical chokepoint for global oil shipments, is the primary driver of the market rally. Analysts caution, however, that the deal's implementation remains uncertain, and any breakdown could reignite volatility. The G7 summit in Évian will likely provide further clarity, as European leaders seek to align on the deal's implications for energy security and regional stability.
