Oil prices fell in early trading in Asia on Monday after Pakistan, which brokered an end to the US-Iran war, announced a deal that President Donald Trump said would reopen the Strait of Hormuz sea route.
Brent crude, the global oil benchmark, was down 4 percent at $83.81 a barrel, while U.S.-traded oil was down 4.7 percent at $80.89.
Pakistani Prime Minister Shehbaz Sharif said an official signing ceremony would take place on Friday, June 19, in Switzerland.
Iran's Deputy Foreign Minister Kazem Gharibabadi confirmed in a phone call on state television that a deal with the US had been finalized, while Trump posted on social media to “let the oil flow!”
But Vandana Hari, of energy market analyst firm Vanda Insights, said the lack of detail on what was agreed “is likely to bring uncertainty to the market”.
This could mean another week of uncertainty and volatility for the oil market, she added.
The strait had been closed shortly after the US and Israel launched airstrikes on Iran on February 28.
Tehran had threatened to attack ships using the waterway, which normally carries about 20 percent of the world's oil and liquefied natural gas (LNG).
Global energy markets have been bullish in recent months, with prices rising and falling in response to developments in the war between the US, Israel and Iran.
Brent crude, which was trading at around $70 a barrel before the conflict began, peaked at around $120 during the war.
Energy market experts also warned that oil shipping through the strait was unlikely to return to pre-war levels immediately.
Andrew Lipow, of consultancy Lipow Oil Associates, said the mines would first have to be removed from the canal, which could take anywhere from a few weeks to six months.
He also said there are a lot of oil tankers waiting to use the waterway and it could take weeks to resume oil production and return vessel loading to normal levels.
Asian stock markets rose on Monday as investors welcomed the deal.
Japan's Nikkei 225 stock index rose 4.3 percent in morning trade, while South Korea's Kospi rose more than 5 percent.
The region has been particularly affected by rising energy prices as it depends heavily on the Middle East for oil and LNG supplies.
