Global oil markets fell sharply at the start of the week after reports of a framework agreement between the United States and Iran raised expectations that the Strait of Hormuz could reopen, easing supply risks. Brent crude dropped 4.3% to $83.55 per barrel, while US West Texas Intermediate fell 4.9% to $80.74.

The sell-off followed announcements from Pakistan, which has been mediating efforts to end the US-Iran conflict, regarding a framework deal. US President Donald Trump said the agreement would include the reopening of the Strait of Hormuz, a route that handles around 20% of global oil shipments.

Pakistan Prime Minister Shehbaz Sharif said an official signing ceremony would take place on Friday, 19 June in Switzerland.

Iran’s Deputy Foreign Minister Kazem Gharibabadi also confirmed in a phone call on state television that a deal with the US had been finalised, while Trump posted on social media, "let the oil flow!".

Despite the market reaction, analysts warned that uncertainty remains due to the absence of detailed terms in the agreement.

But Vandana Hari from energy markets analysis firm Vanda Insights said a lack of detail on what has been agreed "is likely to inject unease and uncertainty into the market."

"This could mean a week of uncertainty and volatility for the oil market, she added."

The Strait of Hormuz has been effectively closed since shortly after the US and Israel launched airstrikes on Iran on 28 February, with Tehran previously threatening to target vessels passing through the waterway during the conflict.

Oil markets have experienced heightened volatility in recent months as prices reacted to developments in the US-Israel-Iran conflict, with Brent crude swinging from around $70 per barrel before the war to peaks of about $120 during the height of tensions.