WTI falls to two-month low near $79.50 on US-Iran agreement

West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $79.40 during the early Asian trading hours on Monday. The WTI price tumbles to a two-month low after reports that the United States (US) and Iran announced a peace deal to end their nearly four-month war. 

Pakistan Prime Minister Shehbaz Sharif said on Sunday that Washington and Tehran have agreed on a peace deal, with both sides declaring the immediate and permanent termination of military operations on all fronts, including in Lebanon, per CNBC. Trump said later that the Strait of Hormuz would open on Friday.

“The deal with the Islamic Republic of Iran is now complete,” US President Donald Trump wrote on Truth Social. “I hereby fully authorize the toll-free opening of the Strait of Hormuz, and, simultaneously herewith, authorize the immediate removal of the United States Naval blockade,” Trump added.  

The Strait of Hormuz had been effectively closed since shortly after the US and Israel launched airstrikes on Iran on February 28. Positive developments surrounding the US-Iran peace deal drag the WTI price lower. 

However, the uncertainty remains high as Trump insisted that if Iran failed to reach a final nuclear accord with the US, he would resume military strikes on Tehran. If the oil disruption is prolonged, this could boost the WTI price in the near term. 

The American Petroleum Institute (API) weekly crude oil report will be published later on Tuesday. A larger-than-expected crude oil inventory draw indicates stronger demand and could lift the WTI price, while a bigger build than estimated signals weaker demand or excess supply, which might undermine the WTI price.