Oil prices fell on Thursday while major Asian stock markets surged after the United States and Iran signed an interim peace agreement aimed at ending months of conflict and restoring stability to global energy markets.
Brent crude, the international oil benchmark, dropped 2.3 percent to $77.73 per barrel as of 05:30 GMT, nearly returning to levels seen before the US and Israel launched military operations against Iran on February 28. The decline resumed a broader downward trend that had only briefly been interrupted on Wednesday when US President Donald Trump warned that Washington could resume bombing Iran if Tehran failed to comply with the agreement.
Asian markets reacted positively to the development. Japan’s Nikkei 225 and South Korea’s Kospi both reached record highs, rising more than 2 percent and 1.7 percent respectively, while Taiwan’s Taiex gained as much as 1.3 percent. Hong Kong’s Hang Seng Index, however, moved against the regional trend, declining 1.7 percent.
US stock futures also advanced, with futures linked to the S&P 500 and Nasdaq Composite climbing about 0.8 percent and 1.3 percent respectively, reflecting investor optimism over easing geopolitical tensions and improving energy supplies.
Norihiro Yamaguchi, lead economist for Japan at Oxford Economics, said markets were encouraged by the fact that both countries signed the memorandum of understanding (MoU) sooner than expected. He added that the conclusion of major central bank policy meetings had removed another source of uncertainty, while gains in US semiconductor stocks were also supporting Asian technology-heavy markets.
The peace framework, brokered by Pakistani Prime Minister Shehbaz Sharif, officially came into effect on Wednesday. Sharif announced that Iran would immediately reopen the Strait of Hormuz, a critical global shipping route, while the United States would lift its naval blockade of Iranian ports.
The Strait of Hormuz has been operating at a fraction of normal capacity due to threats from Iranian missiles, drones and naval mines, as well as the US blockade. According to the International Energy Agency (IEA), the disruption created a daily shortfall of approximately 14 million barrels of oil in the global market.
Despite the market optimism, analysts cautioned that the restoration of normal oil supplies will take time. Fabien Yip, a market analyst at IG in Sydney, said much of the positive impact of the agreement had already been priced into markets. He noted that vessel backlogs, mine-clearing operations and logistical challenges would delay a full recovery in oil shipments.
More than 500 vessels are reportedly waiting to transit through the Strait of Hormuz, while shipping companies remain concerned about the absence of detailed guidance on safe navigation routes and security arrangements.
The Baltic and International Maritime Council (BIMCO), one of the world’s largest shipowners’ associations, warned earlier this week that the security situation in the region remains volatile. BIMCO’s Chief Safety and Security Officer, Jakob Larsen, said neither the US nor Iran had provided sufficient information regarding timelines or safe passage routes and advised shipping companies to continue conducting comprehensive risk assessments before resuming normal operations.
While investors welcomed the agreement, industry experts say it could take weeks or even months before global energy supply chains and maritime traffic return to normal levels.