Oil Prices Plummet After US-Iran Ceasefire Deal Extends April Truce

Oil prices dropped by over 1% on Thursday to their lowest level since the start of the Iran war, following a US-Iran ceasefire deal that will extend the April ceasefire for 60 days.

The agreement includes a 14-point memorandum that begins a 60-day negotiation period during which Iran will allow toll-free passage through the Strait of Hormuz. Traffic through the strait is expected to be restored to its full capacity within 30 days, with industry experts cautioning that prices may not plummet as demand recovers and inventories are refilled.

Goldman Sachs expects Gulf exports to normalize to pre-war levels by end-July, with crude production recovering by October. The bank estimates a 13 million barrels-per-day increase in Hormuz flows from current levels to around 70% of pre-war levels.