Oil prices plunged and global stocks rallied Monday after the United States and Iran announced a deal to end their conflict and reopen the Strait of Hormuz, easing fears of prolonged disruptions to global energy supplies.

The agreement, brokered by Pakistan, is expected to be formally signed in Switzerland on June 19, ending nearly three months of hostilities that had driven oil prices higher and reignited concerns over inflation.

US President Donald Trump announced Sunday that the deal was complete and authorized the reopening of the Strait of Hormuz, a key shipping route that carries about 20 percent of the world's crude oil supply.

“The Deal with the Islamic Republic of Iran is now complete,” Trump wrote on social media.

“I hereby fully authorize the toll free opening of the Strait of Hormuz, and, simultaneously herewith, authorize the immediate removal of the United States Naval blockade.

“Ships of the World, start your engines. Let the oil flow!”

Iranian Deputy Foreign Minister Kazem Gharibabadi later said the agreement brought an “immediate end” to the war, with negotiations on a final settlement expected within two months.

Markets welcomed the development. US benchmark West Texas Intermediate fell as much as 5.6 percent to $80.16 per barrel, while Brent crude dropped 4.1 percent to $83.77.

The decline in oil prices eased concerns that higher energy costs could fuel inflation and force central banks to resume interest rate hikes.

“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 of SPI Asset Management.

Asian markets surged, led by Tokyo and Seoul, where benchmark indexes gained more than 5 percent. Investors also continued to pile into technology stocks following last week's blockbuster debut of Elon Musk's SpaceX.

Japan's Nikkei 225 rose 5.4 percent, while South Korean chipmakers Samsung Electronics and SK hynix posted strong gains. Markets in Shanghai, Sydney, Singapore and Taipei also advanced more than 1 percent.

Indonesia's Jakarta Composite Index climbed more than 4 percent, while the rupiah strengthened as easing concerns over energy costs boosted sentiment.

Despite the market rally, analysts cautioned that investors remain focused on whether both sides will follow through on their commitments.

“This is a first step deal, not a final peace settlement,” Innes said.

“The market will now trade verification.”