OIL PRICES HAVE tumbled by as much as 5% globally after the US and Iran said they had reached a deal to end their war that will reopen the Strait of Hormuz.

The two sides confirmed an announcement from mediator Pakistan, with a signing ceremony set to take place in Switzerland on 19 June, bringing an end to three months of conflict that has sent energy prices soaring and revived fears of another inflation spike.

The Strait is one of the world’s most vital maritime choke point through which roughly 20% of the world’s crude oil supply transits and was effectively closed by Tehran soon after US-Israel strikes on Iran kicked off the conflict on 28 February.

Crude prices tanked as much as 5% Monday, with West Texas Intermediate approaching $80 a barrel, and Brent going down by more than 4% at around $83.60 (€72). 

Both main contracts have come down since their initial surge past $110 (€95) soon after the conflict started.

The sharp drop in oil costs soothed growing concerns that soaring inflation could force central banks to begin hiking interest rates again.

“The Deal with the Islamic Republic of Iran is now complete,” US President Donald Trump wrote on social media Sunday as he marked his 80th birthday.

“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.

“Ships of the World, start your engines. Let the oil flow!”

Iran’s Deputy Foreign Minister Kazem Gharibabadi then said on television that the deal put an “immediate end” to the war and that talks on a “final agreement” will be held within two months.