OIL PRICES PLUNGE, ASIAN STOCKS SURGE AFTER NEW US-IRAN DEAL ANNOUNCED

Oil prices fell sharply in Asia on Monday after the US and Iran agreed to reopen the Strait of Hormuz, the chokepoint that has been effectively closed since February. Brent crude dropped 4.8% to $83.18 a barrel. US-traded oil fell 5.6% to $80.13. The moves come after months of wild swings that saw Brent peak at around $120.

Pakistan, which has been mediating an end to the US-Iran war, announced the deal. An official signing ceremony will be held Friday, June 19 in Switzerland. Iran's Deputy Foreign Minister Kazem Gharibabadi confirmed on state TV that a deal with the US had been finalised. President Donald Trump posted on social media: "Ships of the World, start your engines. Let the oil flow!".

Asian stock markets welcomed the news with sharp rallies. Japan's Nikkei 225 climbed 5.4% to 69,558.12, breaching the 69,000 level for the first time. The broader Topix gained 3.9% to 4,032.39, also a record. South Korea's Kospi rose as much as 5.9% to 8,603.48. The region was hit particularly hard by the conflict because it relies heavily on the Middle East for oil and LNG supplies.

WHAT'S THE DEAL

The headline is a ceasefire for global energy markets, but analysts are cautious. Vandana Hari from Vanda Insights said that the lack of detail on what has been agreed "is likely to inject unease and uncertainty into the market.". She said this could mean a week of uncertainty and volatility for the oil market.

The deal covers the reopening of the Strait of Hormuz, through which about 20% of the world's oil and liquefied natural gas normally passes. Tehran had threatened to attack vessels using the strait after the US and Israel launched airstrikes on Iran on February 28. That effectively shut down the route, sending energy prices on a rollercoaster. Before the conflict, Brent crude was trading around $70 a barrel.

WHAT ACTUALLY NEEDS TO HAPPEN

Even with a political agreement, the physical return of normal shipping will take time. Andrew Lipow from Lipow Oil Associates said mines would first need to be cleared from the waterway, a process that could take from a few weeks to up to six months. There is also a large backlog of tankers waiting to use the strait, and restarting oil production and getting loading of ships back to normal levels could take weeks.

That timeline means the market's relief rally might be premature. The immediate drop in prices reflects the expectation of future supply, not actual barrels hitting the water today. The gap between announcement and execution could lead to more volatile trading in the days ahead.

THE DEAL IS NOT THE END OF THE CONFLICT

Further negotiations to end the war could be complicated by the conflict between Israel and Hezbollah. Israel's strike on Beirut on Sunday morning threatened to derail Trump's timeline. The new head of Iran's powerful Revolutionary Guards is shaping Tehran's hardline tactics in negotiations with Washington, as reported by The Wall Street Journal. These are not small side notes. Hezbollah and the IRGC are central to Iran's regional posture, and neither signed onto the Hormuz deal.

For now, markets are celebrating what looks like the first major de-escalation in months. But the real work: clearing the strait, restarting production, and getting tankers moving, begins after the cameras leave the signing ceremony. The oil price drop is a down payment on optimism. The bill comes due when the details arrive.