US and Iran agree framework deal, sending Brent crude down 5%

The US and Iran agreed to end military operations and reopen the Strait of Hormuz, sending Brent crude below $83 and fueling a rally across risk assets.

The US and Iran agreed Sunday to a framework deal ending their two-month conflict and reopening the Strait of Hormuz, sending Brent crude down roughly 5% to $82.95 and lifting risk assets globally.

"This is the most significant de-escalation in the region since the conflict began, and it removes the single biggest tail risk for oil markets," said Helima Croft, head of commodity strategy at RBC Capital Markets.

Pakistan Prime Minister Shehbaz Sharif announced the agreement, which calls for the immediate termination of military operations on all fronts, including in Lebanon. US President Donald Trump said he ordered the removal of the naval blockade of Iranian ports and that the Strait of Hormuz — through which 20% of the world's oil and natural gas travels — would reopen upon the deal's signing in Switzerland on Friday. Iran's deputy foreign minister Kazem Gharibabadi confirmed the end of military operations on state TV.

The deal extends an April 8 ceasefire for 60 days while both sides negotiate final terms on Iran's nuclear enrichment and sanctions relief. US Vice President JD Vance said Iran never possessing a nuclear weapon was "built into this agreement" with verification provisions. The framework removes a key source of inflation uncertainty that had weighed on global markets since the conflict began on Feb. 28.

The agreement marks a sharp reversal from the conflict that erupted when Israel and the US launched strikes on Iran in late February, killing the country's supreme leader. Iran retaliated with missile attacks on Israel and US assets in Gulf countries, while Hezbollah drew Lebanon into the fighting. The Strait of Hormuz closure had effectively cut off a shipping channel handling roughly 21 million barrels of oil per day, driving fuel prices higher worldwide.

Brent crude's slide to $82.95 represents a roughly 12% decline from the conflict's peak near $94 in early March. The relief extended across asset classes: Bitcoin rallied toward a 31-year high on the geopolitical risk premium unwind, while equity futures in Asia and Europe gained in early trading.

Israel and Hezbollah complicate the ceasefire

Israel's far-right National Security Minister Itamar Ben Gvir said the agreement "does not bind us" and vowed to dismantle Hezbollah, signaling potential obstacles to the 60-day extension. Lebanon and Israel had agreed to a separate ceasefire on April 16, but Israel continued near-daily air strikes on targets it said were linked to Hezbollah, occupying roughly 5% of Lebanese territory. The framework deal's success hinges on both parties adhering to the terms during the negotiation period.

What comes next

The preliminary agreement faces its first test on Friday when both sides are expected to sign the MOU in Switzerland. Key sticking points include Iran's uranium enrichment levels — which the International Atomic Energy Agency had reported at 60% purity, close to weapons-grade — and the release of tens of billions of dollars in frozen Iranian oil revenues. The UK, France, Germany and Italy issued a joint statement saying Iran "must never acquire a nuclear weapon" and that they were prepared to lift sanctions in response to verifiable steps.

For markets, the immediate question is whether the ceasefire holds. The last time a similar geopolitical risk premium unwound in the Middle East — following the 2020 US-Iran tensions after the Soleimani strike — Brent crude fell 15% over six weeks before stabilizing. If this deal holds, the macro backdrop shifts from inflation-fighting to growth-supportive, with implications for central bank rate paths globally.

This article is for informational purposes only and does not constitute investment advice.