Large drop of close to 5% recorded crude oil prices Monday at the lowest levels in the last three months, as markets reacted as expected positively to the United States President's announcement, Donald Trump, that the US and Iran signed a memorandum of understanding aimed at ending the war and reopening it Ormuz Strait.

Brent closed with losses of $4.16 or 4.76%, at 83.17 a barrel, while the American WTI retreated by $4.13 or 4.87%, at $80.75 a barrel.

Both contracts eliminated a significant part of the "war premium" that had been incorporated into prices in recent months, recording the lowest levels since 4 March.

According to an American official, the memorandum has already been signed by Donald Trump, Vice President J.D. Vance and the President of the Iranian Parliament Mohammad Bayer Gallibaf.

The official signing ceremony of the agreement is expected to take place Friday in Geneva.

Return of Hormuz to the epicenter

The semi-official Iranian agency Mehr broadcast that the draft agreement provides for the reopening of the Straits of Hormuz within 30 days under Iranian management.

"With a massive wave of oil supply likely to be at the gates, the price drop seems perfectly justified," said Dennis Kisler of Bok Financial.

In another sign of de-escalation, Iran's state National Oil Company reduced its official sale price of light crude for Asian buyers to $7.15 over the Oman/Dubai index for July, from a $13 premium last month.

At the same time, Citi revised its forecasts for Brent, placing the average price at $75 in the third quarter and $70 in the fourth quarter of 2026, estimating that trade flows through the Straits of Hormuz would be gradually restored.

The market expects millions of barrels to be returned

The global market has lacked millions of barrels of oil and gas since the war led to the closure of the Straits of Hormuz for more than three months.

However, it remains uncertain how quickly these quantities will return to the market.

"The restoration of the supply chain and the restart of activities in the Arab Gulf will be a difficult case. Many shipowners will hesitate to send ships to the area until there are clear indications from insurance companies," said Neil Crosby of Sparta Commodities.

Investors also monitor how quickly Middle Eastern producers will be able to restore their production and exports after the damage caused by the war conflict.

According to the International Energy Agency, more than 14 million barrels of daily production remain off the market, accounting for about 14% of world demand.

Stocks remain low

Despite short-term price pressure, several analysts consider that there are factors that could support oil in the medium term.

UBS analyst Giovanni Staunovo estimates that low reserves, slow re-starting production, and the need to replenish strategic stocks will continue to offer price support.

According to the American Energy Information Service, the stocks of the world's largest economies have been heading towards lower levels since 2003.

At the same time, the stocks of the American Strategic Reserve of Oil fell to 340.3 million barrels, the lowest level since 1983, after new release of quantities under the market emergency supply plan.

In the diplomatic field, talks on Iran's nuclear programme are expected to be the next crucial stage of negotiations. At the same time, the countries of Group E4 — the United Kingdom, France, Germany and Italy — have stated that they are ready to consider lifting sanctions on Iran if progress is made on the nuclear issue.

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