Oil prices fluctuate as Trump's Iran deal could fully reopen Strait of Hormuz

• Brent crude peaked at around $120 per barrel in late April during wartime tensions but has since declined following the announcement of a 60-day ceasefire framework
• The Strait of Hormuz, which handles approximately 20% of global crude oil traffic, is expected to fully reopen to commercial traffic within two days
• Trump denied reports that the U.S. would contribute to a $300 billion fund for Iran's economic development, calling certain leaked details 'false'

Summary

Key Development: Oil prices fluctuated Wednesday as markets await a preliminary U.S.-Iran agreement expected to be signed Friday, with potential full reopening of the Strait of Hormuz within two days, according to President Trump at the G7 Summit in France.

Price Movements:

• Brent crude rose over 1%, crossing $80 per barrel
• West Texas Intermediate crude increased more than 1% to nearly $77 per barrel
• Prices remain above pre-war levels of $65-$75 per barrel but well below the late April wartime high of approximately $120 per barrel

Strategic Context:

Roughly 20% of global crude oil passes through the Strait of Hormuz, a critical chokepoint connecting the Persian Gulf to open ocean. The waterway's status became uncertain following U.S. strikes on Iran on February 28.

Deal Framework:

The preliminary agreement reportedly includes a 60-day ceasefire and reopening of the Strait of Hormuz. However, specific terms remain undisclosed. Trump refuted leaked details suggesting a $300 billion U.S. contribution to Iran's economic development, stating "we're not putting up $0.10."

Market Implications:

President Trump cited rising stock prices and declining oil prices as evidence of successful negotiations. The potential reopening of this vital shipping lane could normalize global oil supply chains and stabilize energy prices. Markets are displaying "restrained optimism" as traders await final deal terms and implementation details.

Sector Impact: Energy markets, shipping/logistics, and global equity markets are closely monitoring developments given the Strait's critical role in global oil transportation.