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Global crude benchmarks plunged by more than 5% on Tuesday, 16 June, extending losses to their lowest levels in three months as details emerged of an interim agreement between the US and Iran to end hostilities in the Middle East and reopen the Strait of Hormuz.

Brent crude futures fell by $4.21/barrel, or 5.1%, to settle at $78.96/barrel.

WTI declined by $4.70/barrel, or 5.8%, to close at $76.05/barrel.

The sharp sell-off was triggered by reports that Washington and Tehran are preparing to formally sign an interim peace agreement on Friday. Under the near-final draft, Iran would be permitted to immediately resume oil sales and export petrochemical products and derivatives under sanctioned waivers. The agreement would also enable tankers stranded since the onset of the conflict to transit through the Strait of Hormuz once again.

Beyond the immediate resumption of Iranian exports, the proposed deal reportedly includes access to a $300 billion development fund and broad financial concessions for Tehran, raising expectations of a sizeable increase in global energy supply.

Additional pressure on oil prices stemmed from persistent concerns over China's economic outlook, rising global inflation and interest rates, and renewed US calls for a peace settlement between Russia and Ukraine.

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