Oil prices dropped to their lowest levels in three months on Monday after US President Donald Trump and Iran's Deputy Foreign Minister announced a preliminary agreement to end the conflict and restore shipping through the Strait of Hormuz.

Brent crude futures fell $4.39, or 5.0%, to $82.94 per barrel by 09:43 GMT, while US West Texas Intermediate crude dropped $4.62, or 5.4%, to $80.26 per barrel.

Both benchmarks touched their lowest levels since March 10 after already falling more than 3% on Friday.

End of the conflict

Pakistan's Prime Minister, whose country played a mediating role, said the United States and Iran are expected to sign a memorandum of understanding in Switzerland on Friday.

Trump also said on Sunday that the Strait of Hormuz would be reopened "without transit fees" and that the US naval blockade of Iranian ports would be lifted.

Iran's semi-official Mehr News Agency reported that the draft agreement calls for the Strait of Hormuz to be fully reopened within 30 days under arrangements coordinated by Iran.

"It will take time before oil flows through this vital corridor return to pre-crisis levels of 20 million barrels per day," said Tamas Varga, analyst at PVM Oil Associates.

"Estimates for a full resumption range from several weeks to several months," he added.

Varga noted that financial investors are effectively pricing in future supply, helping explain the current decline in oil prices. He also warned that a slow reopening could leave global markets facing supply deficits throughout 2026.

The Strait of Hormuz

The world has lost millions of barrels of oil and gas supplies since the closure of the Strait of Hormuz—through which roughly one-fifth of global oil and liquefied natural gas shipments normally pass—for more than three months during the conflict.

Investors are also closely monitoring how quickly Middle Eastern producers can restore production and exports after war-related disruptions, and whether more shipping companies will return to the region.

"The damage that has already been done cannot be reversed overnight," said Priyanka Sachdeva, Senior Market Analyst at Phillip Nova.

"This includes not only potential physical damage to oil infrastructure, but also the economic strain that oil-importing countries have endured after months of elevated energy costs," she added.

Iranian Deputy Foreign Minister Kazem Gharibabadi said a broader agreement will be negotiated during a 60-day ceasefire period.

Meanwhile, Israeli Defense Minister Israel Katz said Israeli forces will continue operating in security zones in Lebanon, Syria, and Gaza indefinitely to protect Israel's borders and settlements.

Sources have also indicated that the future of Iran's nuclear program—another highly sensitive issue—will be addressed during subsequent negotiations.

David Gorbinazi, Head of Global Oil Markets at ICIS, said he expects "a partial recovery in shipping activity within weeks of a credible agreement, with a meaningful commercial recovery occurring within four to six months."

"A full return to pre-war traffic volumes is realistically a 2027 story, and only if the agreement holds without incidents and production levels recover quickly," he added.

Separately, the E4 countries—Britain, France, Germany, and Italy—announced on Sunday that they are prepared to lift sanctions on Iran in exchange for progress on its nuclear program.

Silver prices climbed more than 4% in European trading on Monday, extending gains for a third consecutive session and reaching their highest level in two weeks. The metal surged back above the key $70-per-ounce mark, supported by a weaker US dollar and sharply lower oil prices after the United States and Iran reached a peace agreement that is expected to be formally signed in Switzerland on Friday.

Expectations for at least one Federal Reserve rate hike this year have also eased as falling oil prices are expected to slow inflation and reduce broader price pressures.

The Price

• Silver prices today: Silver rose 4.2% to $70.86 per ounce, its highest level in two weeks, from an opening level of $68.01. The session low was also recorded at $68.01.

• At Friday's settlement, silver gained 1.0%, marking its second consecutive daily advance as the metal continued to recover from a three-month low of $61.50 per ounce.

• Silver posted a gain of 0.35% last week, its first weekly advance in five weeks, supported by bargain buying at lower levels.

US dollar

The US Dollar Index fell 0.45% on Monday, touching a two-week low of 99.42 and reflecting broad weakness in the greenback against a basket of global currencies.

Risk sentiment improved after US and Iranian officials announced a framework agreement to end the conflict, lift the US blockade on Iran, and reopen the Strait of Hormuz.

Global oil prices

Oil prices fell by an average of 5% on Monday, extending losses for a third consecutive session and dropping to their lowest levels in three months as concerns over Middle East supply disruptions faded following the reopening of the Strait of Hormuz.

Developments in the Iran conflict

• The United States and Iran have reached a preliminary agreement to end the conflict, with a formal signing expected on Friday in Geneva.

• President Donald Trump confirmed the deal and announced the lifting of the naval blockade on Iranian ports, alongside the reopening of the Strait of Hormuz to global shipping traffic.

• Pakistani Prime Minister Shehbaz Sharif, who reportedly served as the chief mediator, said the agreement includes an immediate and permanent ceasefire across all fronts, including Lebanon.

• Mediators have set Friday, June 19, 2026, as the date for the official signing ceremony between US and Iranian delegations in Switzerland.

• Under the draft agreement, Tehran has pledged not to pursue nuclear weapons and will accept strict inspection measures.

• Iran's Mehr News Agency reported that the memorandum of understanding includes a 60-day negotiation period on the nuclear issue and calls for the release of $24 billion in frozen Iranian assets during the talks.

US interest rates

• With oil prices falling, CME Group's FedWatch Tool shows the probability of a Federal Reserve rate hike in December declining from 67% to 55%.

• Market pricing for no change in interest rates at the June meeting has slipped from 98% to 95%, while the probability of a 25-basis-point rate cut has increased from 2% to 5%.

• The Federal Reserve begins its latest monetary policy meeting on Tuesday, with a decision scheduled for Wednesday. Markets overwhelmingly expect policymakers to leave rates unchanged for a fourth consecutive meeting.

Gold prices surged about 3% in European trading on Monday, extending gains for a third consecutive session as a weaker US dollar and sharply lower oil prices boosted demand after the United States and Iran reached a peace agreement that is expected to be formally signed in Switzerland on Friday.

Expectations for at least one Federal Reserve rate hike this year have also eased, as falling oil prices are expected to slow inflation and reduce broader price pressures across the economy.

The Price

• Gold prices today: Gold rose 3.0% to $4,345.48 per ounce from an opening level of $4,219.40, with the session low also recorded at $4,219.40.

• At Friday's settlement, gold gained 0.2%, marking its second consecutive daily advance as the metal continued to recover from a seven-month low of $4,023.86 per ounce.

• Despite the recent rebound, gold lost 2.55% last week, its second consecutive weekly decline, amid persistent selling pressure across precious metals markets.

US dollar

The US Dollar Index fell 0.45% on Monday, touching a two-week low of 99.42 and reflecting broad weakness in the greenback against a basket of major and minor currencies.

Market sentiment improved after US and Iranian officials announced a framework agreement to end the conflict, lift the US blockade on Iran, and reopen the Strait of Hormuz.

Global oil prices

Oil prices fell by an average of 5% on Monday, extending losses for a third straight day and dropping to their lowest levels in three months as concerns over Middle East supply disruptions faded following the reopening of the Strait of Hormuz.

Developments in the Iran conflict

• The United States and Iran have reached a preliminary agreement to end the conflict, with a formal signing expected on Friday in Geneva.

• President Donald Trump confirmed the deal and announced the lifting of the naval blockade on Iranian ports, alongside the reopening of the Strait of Hormuz to global shipping traffic.

• Pakistani Prime Minister Shehbaz Sharif, who reportedly served as the chief mediator, said the agreement includes an immediate and permanent ceasefire across all fronts, including Lebanon.

• Mediators have set Friday, June 19, 2026, as the date for the official signing ceremony between US and Iranian delegations in Switzerland.

• Under the draft agreement, Tehran has pledged not to pursue nuclear weapons and will accept strict inspection measures.

• Iran's Mehr News Agency reported that the memorandum of understanding includes a 60-day negotiation period on the nuclear issue and calls for the release of $24 billion in frozen Iranian assets during the talks.

US interest rates

• Goldman Sachs expects the Federal Reserve to leave interest rates unchanged throughout 2026 and postpone any rate cuts until 2027, citing stronger economic activity and continued job growth.

• With oil prices falling, CME Group's FedWatch Tool shows the probability of a Federal Reserve rate hike in December declining from 67% to 55%.

• Market pricing for no change in interest rates at the June meeting has slipped from 98% to 95%, while the probability of a 25-basis-point rate cut has increased from 2% to 5%.

• The Federal Reserve begins its latest monetary policy meeting on Tuesday, with a decision scheduled for Wednesday. Markets overwhelmingly expect policymakers to leave rates unchanged for a fourth consecutive meeting.

Gold outlook

Tim Waterer, Chief Market Analyst at KCM Trade, said lower oil prices and a weaker US dollar, driven by easing geopolitical risks and the expected reopening of the Strait of Hormuz, are helping to calm inflation expectations.

Waterer added: "This combination is providing gold with its strongest support in weeks, though the durability of that support will depend on the strength and credibility of the peace agreement."

SPDR Gold Trust

Holdings of the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, were unchanged on Friday for a second consecutive session, leaving total holdings at 1,013.64 metric tons, the lowest level since October 9, 2025.

The euro advanced broadly in European trading on Monday against a basket of major currencies, reaching its highest level in two weeks against the US dollar as positive sentiment swept through financial markets following the announcement of a peace framework between the United States and Iran, which is expected to be formally signed in Switzerland on Friday.

Last week, the European Central Bank raised interest rates for the first time in three years in an effort to contain mounting inflationary pressures stemming from higher energy prices and geopolitical tensions in the Middle East.

The ECB also emphasized that future monetary policy decisions will remain fully dependent on incoming economic data and developments in inflation and economic activity across the eurozone, without committing to a predetermined path for interest rates.

The Price

• Euro exchange rate today: The euro rose 0.4% against the US dollar to $1.1617, its highest level since June 5, up from an opening level of $1.1569. The session low also stood at $1.1569.

• The euro ended Friday down 0.1% against the dollar, marking its second loss in three sessions amid ongoing geopolitical developments in the Middle East.

• The single currency gained 0.4% last week against the dollar, recording its second weekly advance in the past three weeks, supported by the ECB's interest rate increase.

US dollar

The US Dollar Index fell 0.4% on Monday, touching a two-week low of 99.42 and reflecting broad-based weakness in the greenback against a basket of global currencies.

Risk sentiment improved after US and Iranian officials announced agreement on a framework to end the conflict, lift the US blockade on Iran, and reopen the Strait of Hormuz.

Global oil prices

Oil prices fell more than 4% on Monday, extending losses for a third straight session and dropping to their lowest levels in three months as concerns over Middle East supply disruptions eased following the reopening of the Strait of Hormuz.

Developments in the Iran conflict

• The United States and Iran have reached a preliminary agreement to end the conflict, with a formal signing expected on Friday in Geneva.

• President Donald Trump confirmed the deal and announced the lifting of the naval blockade on Iranian ports, alongside the reopening of the Strait of Hormuz to global shipping traffic.

• Pakistani Prime Minister Shehbaz Sharif, who reportedly served as the key mediator, said the agreement includes an immediate and permanent ceasefire across all fronts, including Lebanon.

• Mediators have set Friday, June 19, 2026, as the date for the official signing ceremony between US and Iranian delegations in Switzerland.

• Under the draft agreement, Tehran has pledged not to pursue nuclear weapons and will accept strict inspection measures.

• Iran's Mehr News Agency reported that the memorandum of understanding includes a 60-day negotiation period on the nuclear file and calls for the release of $24 billion in frozen Iranian assets during the talks.

European interest rates

• Last Thursday, the European Central Bank raised interest rates by 25 basis points to 2.40%, marking the first ECB rate hike since September 2023 in response to inflationary pressures linked to the Iran conflict.

• The ECB acknowledged that the Iran war and the energy crisis have increased inflationary pressures across the eurozone and revised its inflation forecasts higher for 2026 and 2027.

• The central bank reiterated that future decisions will depend entirely on incoming economic data, geopolitical developments, and its assessment of core inflation.

• Reports indicate that the ECB is considering pausing policy normalization in July if energy prices remain near current levels.

• With oil prices falling, money markets have reduced the probability of a 25-basis-point ECB rate hike in July from 50% to 30%.

• Expectations for a 25-basis-point increase in September have also declined from 70% to 50%.

• Investors are now awaiting additional eurozone data on inflation, unemployment, and wage growth to reassess the outlook for ECB policy.