West Texas Intermediate traded below $77 a barrel after dropping 16% over four sessions, its longest losing streak of the year and near a three-month low.
Expectations for an interim US-Iran pact due to be signed Friday drove the selloff, with traders betting a reopening of the Strait of Hormuz would release more crude supply.
Tehran would gain broad financial incentives under the deal, including the immediate right to sell its oil, reinforcing expectations of a supply wave.
Brent also weakened, ending below $79 a barrel, showing the pressure has spread across global oil benchmarks.
The Strait of Hormuz is mined. Is the market's oil price plunge dangerously premature?
With Israel outside the agreement, can this fragile US-Iran ceasefire truly prevent another war?
Global Oil Prices Tumble After US-Iran Accord: Strait of Hormuz Reopens, Markets and Consumers Brace for Slow Recovery
Overview
The announcement of a US-Iran agreement to end conflict and reopen the Strait of Hormuz triggered a sharp drop in global oil prices, as markets grew optimistic about increased supply and reduced geopolitical tensions. This optimism led major investment banks to quickly lower their oil price forecasts. While the agreement promises to restore vital shipping routes, global stock markets reacted in mixed ways, with some indices falling and others rising. The immediate market response highlights how closely oil prices and financial markets are tied to geopolitical developments, and shows that the path to full recovery will depend on the successful implementation of the deal.