Oil prices plunged to their lowest level in two months after President Trump suggested a peace deal with Iran could be finalized within days. West Texas Intermediate crude dropped nearly 3% to $85.13 a barrel, the cheapest since April 17, as markets reacted to the prospect of renewed Middle Eastern stability following recent US military strikes.

The Strait of Hormuz closure has choked off critical crude supplies, sending global inflation higher while disrupting energy flows to worldwide markets. Iran has not yet approved any agreement text, despite Trump's claims that Tehran's supreme leader agreed to terms. The war disrupted shipping routes and raised concerns about nuclear proliferation.

Markets appear to view compromise as more likely than breakdown, according to Haris Khurshid of Karobaar Capital. However, significant obstacles remain even if a deal materializes, including mine removal in Hormuz and months needed to restart shut-in oil fields damaged by drone and missile strikes.

Fuel stockpiles in Singapore sit at their lowest level since 2013, while US crude inventories have fallen sharply over the past five weeks. These supply constraints underscore why any Iran agreement would significantly impact global energy markets, though full normalization could take considerable time.