Global oil prices fell to their lowest levels in more than three months on Tuesday as markets assessed the prospects of a US-Iran peace deal that could restore crude flows through the Strait of Hormuz, a key shipping route for global energy supplies.

 Brent crude futures dropped USD 1.44, or 1.7%, to USD 81.73 per barrel, while US West Texas Intermediate (WTI) crude declined USD 1.55, or 1.9%, to USD 79.20 per barrel, Reuters reports. Both benchmarks touched their lowest levels since March 10.

The decline followed a nearly 5% drop on Monday after US President Donald Trump announced that a memorandum of understanding had been signed to end the US-Israeli war with Iran, although details of the agreement have yet to be fully disclosed.

The development is being closely watched by energy-importing countries such as the Philippines, as lower global crude prices could ease pressure on domestic fuel costs and power generation expenses if sustained.

Markets are also anticipating the reopening of the Strait of Hormuz, which carries roughly one-fifth of global oil supplies and was disrupted during the conflict.

Iranian Foreign Minister Abbas Araqchi said Iran and the United States would begin a new round of talks in Switzerland on Friday aimed at securing a final agreement following an interim deal.

Investment bank Goldman Sachs lowered its fourth-quarter Brent crude forecast to USD 80 per barrel from USD 90, citing expectations that Gulf oil exports could return to pre-war levels by the end of July.

At the same time, analysts pointed to signs of weakening oil demand. Morgan Stanley said several indicators suggest softer physical oil markets, while China’s crude imports fell 29% in May to their lowest level in eight years.

Despite the price decline, analysts cautioned that uncertainty remains.

Suvro Sarkar, head of energy research at DBS Bank, said markets would closely monitor efforts to reopen the Strait of Hormuz and ease restrictions on Iranian shipping.

“Anything other than a clean simultaneous unlock will mean renewed volatility in oil prices,” Sarkar was quoted as saying. “Given the trust deficit so far, it will be interesting to see how this plays out over the next couple of weeks.”

Reuters reported that early indications suggest the agreement could reopen the Strait of Hormuz and extend a ceasefire for 60 days, providing more time for negotiations on issues including Iran’s nuclear program. However, with details still emerging and a permanent settlement yet to be reached, volatility risks remain for global energy markets.

What could sustained lower oil prices mean for Philippine fuel consumers, power producers, and inflation outlook? Share your thoughts.

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