US-Iran war ends. Oil price drops, raises hopes of cheaper fuel, lower inflation, fertiliser relief

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Ziraat Times
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Ziraat Times News Desk

Srinagar: Oil prices fell sharply in Asian trading on Monday after US President Trump and Iranian negotiators  announced a deal between the United States and Iran would lead to the reopening of the strategically vital Strait of Hormuz, a development that could bring significant relief to consumers, farmers and businesses worldwide.

Global benchmark Brent crude dropped 4 percent to $83.81 per barrel, while US-traded crude fell 4.7 percent to $80.89, reflecting market optimism that energy supplies would stabilize after months of conflict-driven disruptions.

According to reports, an official signing ceremony for the agreement would take place in Switzerland on June 19. Iran’s Deputy Foreign Minister Kazem Gharibabadi confirmed that a deal had been finalized, while US President Donald Trump welcomed the breakthrough, urging markets to “let the oil flow”.

The reopening of the Strait of Hormuz is particularly significant because nearly one-fifth of the world’s oil and liquefied natural gas (LNG) supplies pass through the narrow waterway. The strait had effectively remained closed since shortly after US and Israeli airstrikes on Iran on February 28, causing energy prices to surge globally.

Analysts say lower oil prices could translate into more affordable fuel and transportation costs, easing inflationary pressures that have affected economies across the world. Reduced energy costs are also expected to lower the price of manufacturing, logistics and food distribution.

The development is especially important for agriculture. Cheaper energy and improved shipping routes could facilitate smoother global trade in fertilisers, many of which depend on natural gas and petroleum-linked inputs. Lower fertiliser costs would help farmers reduce production expenses and potentially improve crop profitability.

Brent crude had risen from around $70 per barrel before the conflict to nearly $120 during the peak of hostilities. Although experts caution that full restoration of shipping and oil flows may take weeks or months due to mines, tanker backlogs and production disruptions, markets are already pricing in expectations of improved supply and greater economic stability.

If the agreement holds, economists believe it could become a major factor in reducing global inflation and supporting food security in the months ahead.

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