Oil prices drop after US Iran interim deal opens Hormuz

Global oil prices fell sharply on July 22, dropping more than $2 per barrel after the United States and Iran signed an interim agreement aimed at ending the conflict and reopening the Strait of Hormuz. The deal, which includes a waiver of U.S. sanctions on Iranian oil, boosted expectations for increased global supply. Brent crude futures fell 2.69 percent to $77.41 a barrel, their lowest level since March 2, while U.S. West Texas Intermediate crude declined 3.07 percent to $74.43.

The sell-off reversed a brief price increase from the previous day, which had followed comments from U.S. President Donald Trump suggesting he could resume military action if Iran did not comply. Analysts said markets were aggressively pricing in a faster-than-expected return of Iranian oil to the market following the memorandum of understanding. The 14-point agreement initiates a 60-day negotiation period during which Iran will allow toll-free passage through the Strait of Hormuz, a critical shipping lane for about one-fifth of global oil consumption. The deal calls for traffic through the strait to be restored to full capacity within 30 days.

This development followed days of heightened volatility as...