Oil prices crashed and stocks rocketed Monday after the United States and Iran said they'd reached a deal to end their war, reopening the Strait of Hormuz and sending a wave of relief through global markets.

The two sides confirmed an announcement from mediator Pakistan, with a signing ceremony set for June 19 in Switzerland. The deal ends three months of conflict that sent energy prices soaring and revived fears of another inflation spike.

The Strait of Hormuz — a vital maritime chokepoint through which roughly 20% of the world's crude oil supply transits — was effectively closed by Tehran soon after US-Israel strikes on Iran launched the war.

"The Deal with the Islamic Republic of Iran is now complete," US President Donald Trump wrote on social media Sunday as he marked his 80th birthday. "I hereby fully authorize the toll free opening of the Strait of Hormuz. Ships of the World, start your engines. Let the oil flow!"

Iran's Deputy Foreign Minister Kazem Gharibabadi said the deal put an "immediate end" to the war, with talks on a "final agreement" due within two months. The content of the agreement, which follows weeks of fraught negotiations and periodic threats from Trump of fresh hostilities, remained unclear.

Crude prices tanked as much as 5% Monday. West Texas Intermediate approached $80 a barrel for the first time since the start of March. Brent was down nearly 5% at around $83.30. Both main contracts have come down since their initial surge past $110 soon after the conflict started.

The sharp drop in oil costs soothed growing concerns that soaring inflation could force central banks to begin hiking interest rates again. Data last week showing a jump in US May consumer prices — coupled with strong jobs creation — had ramped up bets on the Federal Reserve tightening before the end of the year.

"Oil down takes the inflation impulse down. Lower inflation risk takes some of the Fed-hike premium out of the curve. Lower yields give duration and growth equities room to breathe," said Stephen Innes at SPI Asset Management. "The dollar loses a bit of its wartime bid... in one headline chain, the market moves from bunker pricing to reopening pricing."

Traders will now watch for the next steps: the official signing in Switzerland, mine clearance, and Israeli restraint. "While it's certainly good news for the global economy and Asia that a deal has been announced, whether this sticks and remains viable depends among other things on the details of the negotiated terms," said Wan, an analyst.

Asian equities surged, led by Tokyo and Seoul, which both closed around 5% higher thanks to another flood into tech firms, fuelled by last week's record-breaking $75 billion IPO by Elon Musk's SpaceX. Shanghai, Sydney, Singapore and Taipei rose more than 1% while Hong Kong advanced 0.7%, and London, Paris and Frankfurt all had upbeat starts.

Jakarta jumped more than 4% as easing concerns over energy costs provided fresh support to the beleaguered rupiah, which strengthened to 17,700 per dollar, its best level since the end of May. It had touched a record 18,209 earlier this month.

South Africa, a net oil importer, stands to benefit from lower crude prices. Fuel prices, which have been under pressure due to the war, could see relief at the pump. The rand may also strengthen as global risk appetite improves, though the country's own economic challenges remain.

  • Oil prices crashed up to 5% on Monday
  • WTI crude near $80/barrel, Brent around $83.30
  • Strait of Hormuz carries 20% of world's crude oil supply
  • US-Iran war lasted three months; deal signed June 19
  • Asian markets surged; Tokyo and Seoul up ~5%
  • Jakarta jumped over 4%; rupiah strengthened to 17,700/$