Oil markets rallied Monday on news that the U.S. and Iran reached an interim deal to reopen the Strait of Hormuz, easing supply concerns that have pressured energy prices for months. Brent crude fell 5% to $82.96 a barrel while WTI dropped 5.7% to $80.07, with natural gas sliding 6.1% to 43.91 euros per megawatt hour in Europe.

President Trump announced on Sunday that the critical waterway would reopen Friday, allowing time for mine removal operations. He added that the strait would operate toll-free and that a U.S. naval blockade on Iranian ports would lift simultaneously. Tehran confirmed the agreement, though both sides left many details unspecified.

Pakistani Prime Minister Shehbaz Sharif said the deal would be formally signed Friday in Switzerland, marking the first major step toward ending a nearly four-month conflict that has disrupted global energy markets. The reopening signals potential normalization of Gulf oil flows.

Energy traders welcomed the news after months of volatility stemming from Hormuz shipping disruptions. With the strait handling roughly 20% of global oil trade, its reopening removes a significant supply risk premium that had been weighing on prices throughout the summer trading season.