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US Oil Update: Oil Extends Losses as Trump Signals Friday Hormuz Reopening

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Crude futures shed over 4% in midday trading on Monday as markets assessed the US-Iran agreement and plans to fully reopen the Strait of Hormuz, which President Donald Trump said would operate on a "toll-free" basis.

Front-month West Texas Intermediate crude futures fell 5.10% to $80.54 per barrel, while Brent futures declined 4.72% to $83.21/bbl.

US President Donald Trump said the deal with Iran is "all signed, and the Strait is already partially opened," adding that the waterway will be fully operational by Friday. The official signing is expected to take place in Switzerland on Friday.

Trump made the remarks while appearing alongside French President Emmanuel Macron at the Group of Seven or G7 Summit in France.

During a bilateral meeting with French President Emmanuel Macron, Trump pointed to the decline in crude prices, saying, "... oil has taken its biggest plunge... we're getting close to the numbers we were before it all started..."

Trump said mine-clearing operations are advancing, adding, "We'll have all the mines knocked out for the most," before the Strait of Hormuz fully reopens on Friday.

Trump added that shipping traffic will move through the Strait of Hormuz without charges, describing the waterway as "toll-free."

Oil prices declined after the recent developments as traders expected additional supply to enter the market following progress in US-Iran talks and plans to reopen the Strait of Hormuz.

Daniel Hynes, senior commodity strategist at ANZ Bank, said roughly 127 oil tankers remain inside the Persian Gulf and dozens more vessels are waiting near the strait. Hynes added that shipowners continue to adopt a wait-and-see approach.

Traders are preparing for a supply surge from tankers stranded in the Persian Gulf, although the extent of further declines in crude prices will depend on inventory rebuilding, production restarts, demand conditions and the speed of supply-chain normalization, according to Saxo Bank.

Freight participants remain cautious despite the proposed reopening, with many seeking stronger security guarantees before returning vessels to the region.

Sheel Bhattacharjee, head of freight pricing at Argus Media, said market participants remain doubtful that a "sustained and meaningful return of ships through the strait" will occur anytime soon.

Bhattacharjee added that many shipowners may "remain in lower-risk regions out of the Mideast Gulf" rather than return immediately, as they continue to prioritize security and wait for stronger cargo demand.

Benedict George, head of refined product pricing at Argus Media, said oil product supplies to Europe, Africa and Asia could recover within six weeks if the Strait of Hormuz remains open, although Europe is unlikely to see immediate physical supply relief.

Cyril Widdershoven, senior advisor at Blue Water Strategy, said the agreement appears to be a temporary political arrangement rather than a lasting settlement, adding that it should not be viewed as a "comprehensive peace agreement" because key regional and strategic disputes remain unresolved.

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