Global financial markets reacted positively on Monday after the United States and Iran announced an agreement to end their conflict and reopen the strategic Strait of Hormuz, easing concerns about disruptions to global energy supplies.
The breakthrough followed a mediation effort led by Pakistan, with both countries confirming that a formal signing ceremony is expected to take place in Switzerland on June 19.
The agreement is designed to bring an end to a three-month conflict that had rattled energy markets, fuelled inflation fears and heightened geopolitical tensions across the Middle East.
The Strait of Hormuz, one of the world’s most critical energy shipping routes through which approximately 20 per cent of global crude oil supplies pass, had effectively been closed following the escalation of hostilities involving United States and Israeli strikes on Iran.
Announcing the development, US President Donald Trump stated that the agreement had been concluded and authorised the reopening of the vital waterway.
“The Deal with the Islamic Republic of Iran is now complete,” Trump said, while urging the resumption of international shipping and energy exports through the corridor.
Iran’s Deputy Foreign Minister, Kazem Gharibabadi, also confirmed that the deal provides for an immediate halt to hostilities, while noting that additional negotiations are expected within the next two months to establish a broader and more permanent settlement.
The announcement triggered a sharp decline in oil prices, with benchmark crude contracts falling by as much as five per cent. West Texas Intermediate crude dropped to approximately $83 per barrel, significantly below the levels recorded during the peak of the conflict when prices surged above $110 per barrel.
Market analysts said the drop in oil prices has helped ease global inflation concerns and reduced expectations that major central banks, including the US Federal Reserve, would need to implement further interest rate increases.
The improved outlook also boosted investor confidence across global equity markets.
Asian stock markets recorded strong gains, with major indexes in Tokyo and Seoul advancing sharply. Markets in Shanghai, Sydney, Singapore and Taipei also closed higher as investors welcomed the reduction in geopolitical risk.
European markets followed suit, opening in positive territory as traders responded to the prospect of improved stability in global energy markets.
Indonesia’s capital market emerged as one of the strongest performers, with Jakarta’s benchmark index rising more than four per cent. The country’s currency also strengthened against the US dollar as lower energy costs improved economic sentiment.
Investors are now closely monitoring developments ahead of the planned signing ceremony in Switzerland and assessing whether the agreement can withstand ongoing geopolitical challenges in the region.
Despite the optimism, analysts caution that long-term market stability will depend on the successful implementation of the agreement and continued diplomatic engagement between all parties involved.
