Oil prices crashed below $80 a barrel on Tuesday for the first time since early March, after the US and Iran agreed to reopen the Strait of Hormuz — the world's most important oil chokepoint.

Brent North Sea crude, the international benchmark, dropped 4.0 percent to $79.87 a barrel before slightly recovering. The US West Texas Intermediate slid even harder — down 4.7 percent to under $77 a barrel.

The trigger: US President Donald Trump said the Strait of Hormuz would "completely open" once Washington and Iran sign their peace agreement on Friday in Switzerland. Iranian media reported that three oil tankers and two cargo ships had already passed through.

Tehran blockaded the strait after the US and Israel launched their war against Iran on February 28. That conflict sent oil prices soaring and disrupted global shipping. Washington later halted shipping to and from Iranian ports.

"Although the deal hasn't been formally signed, there already appears to be a peace dividend for markets," said Kathleen Brooks, research director at trading group XTB.

But don't pop the champagne just yet. Analysts warned that market conditions could remain tight for weeks or even months after the conflict ends.

"Oil prices, for now, are hovering at the lowest level in two months… but it's still trading at a premium compared to pre-conflict levels, demonstrating the ongoing uncertainties about supplies," said Susannah Streeter, chief investment strategist at Wealth Club.

One reason for the caution: US Energy Department data showed America's strategic oil stockpiles sank last week to their lowest level since 1983. That means Washington will likely need to buy heavily to rebuild reserves, keeping demand high even if the Middle East calms down.

Traders are also eyeing a new risk — Iran may slap "service fees" on ships transiting the strait. That could keep costs elevated even after the blockade ends.

"It's normal for markets to want to consolidate their gains after strong up days, especially now that we're still trying to figure out exactly what's in the agreement that's been signed," said Steve Sosnick of Interactive Brokers.

Wall Street was cautious — the Dow added 0.8 percent, but the broader S&P 500 dipped 0.2 percent and the tech-heavy Nasdaq shed 0.4 percent. Europe's main markets closed higher, while Asia ended mixed.

This week is also packed with central bank decisions. US Federal Reserve Chairman Kevin Warsh kicked off his first meeting in charge of the rate-setting committee on Tuesday. Policymakers are expected to keep rates steady as the fallout of the Iran war ripples through the world's largest economy. The Bank of England is also expected to stand pat.

The Bank of Japan went the other way — it raised interest rates to their highest level since 1995, though the yen barely moved.

Tech stocks got a boost from Elon Musk's SpaceX, which was up around 10 percent — and briefly almost 20 percent — for a second straight session after listing last week.

For Nigeria, the oil price drop could ease pressure on petrol prices and the naira, but the premium above pre-war levels means the relief may be slow to reach the pump. The Dangote refinery recently slashed its petrol gantry price by N75 per litre, but global crude costs remain a key factor.

Here are the key market figures as at 1530 GMT:

  • Brent North Sea Crude: DOWN 3.9% at $79.92/barrel
  • West Texas Intermediate: DOWN 4.7% at $76.95/barrel
  • New York – Dow: UP 0.8% at 52,062.49
  • New York – S&P 500: DOWN 0.2% at 7,538.23
  • New York – Nasdaq: UP 0.4% at 26,573.34
  • London – FTSE 100: UP 0.7% at 10,504.47 (close)
  • Paris – CAC 40: UP 0.8% at 8,446.78 (close)
  • Frankfurt – DAX: UP less than 0.1% at 24,914.76 (close)
  • Tokyo – Nikkei 225: UP 0.1% at 69,404.50 (close)
  • Hong Kong – Hang Seng Index: DOWN 1.4% at 24,493.95 (close)
  • Shanghai – Composite: DOWN 0.1% at 4,091.89 (close)
  • Seoul – Kospi: UP 2.1% at 8,726.60 (close)
  • Euro/dollar: UP at $1.1603
  • Pound/dollar: UP at $1.3421
  • Dollar/yen: UP at 160.46 yen