Oil prices have fallen following the peace deal (Image: Getty)
Oil prices have fallen following the agreement of a peace deal between the US and Iran.
With the Strait of Hormuz set to be reopened, prices dropped immediately after the announcement.
In early trade in Asia, prices fell as president Donald Trump claimed that ‘oil will flow’.
Brent crude, the global oil benchmark, was 3.8 per cent lower at $84.02 (£62.48) a barrel, while US-traded oil was down 4.1 per cent at $81.40.
Pakistan said that the agreement will be officially signed on Friday in Switzerland.
The specific points of the agreement are yet to be confirmed by either country, however Iranian state media has detailed the draft of a 14-point memorandum of understanding.
This includes the lifting of US naval blockade within 30 days and the reopening the Strait of Hormuz within 30 days “under Iranian arrangements”.
The strait had been effectively closed since shortly after the US and Israel launched airstrikes on Iran on February, 28.
The strait is responsible for the transportation of roughly 20 per cent of the world’s oil and gas supplies.
Following the deal being reached, Trump has made several posts on Truth Social.
He claimed to have succeeded where other leaders have failed, again emphasising that ‘oil will flow’ around the world again.
His post reads: “This Great Deal will bring Peace and Security to the whole Region.
“Many presidents have tried to make Peace with Iran, and all have failed before me. The Leaders of the Region have, for the first time, found a President who can help them achieve real Peace.
“With the opening of the Strait upon the signing of the Deal on Friday, for purposes of mine removal, oil will flow on both ends again for the Region, and the World!”
The US president spoke to the New York Times on Sunday afternoon, and he said that the deal with Iran ensures the Strait of Hormuz is “permanently toll free”.
Throughout the duration of the conflict the price of petrol has continued to rise, fluctuating since February.
In May, the average price of unleaded petrol rose to 158.52p a litre, according to the RAC.
Despite a deal being struck, earlier predictions by investment bank JP Morgan said that gloabl oil prices are likely to remain in the “low $100s” for much of this year even if the Strait of Hormuz reopens.
It is anticipated that supplies of oil in the region will not return to normal service quickly.