U.S. stock futures jumped and oil prices tumbled on Sunday after the U.S. and Iran confirmed they finally reached an agreement to extend their ceasefire that would reopen the Strait of Hormuz, after weeks of dashed hopes.
Futures tied to the Dow Jones industrial average leapt 430 points, or 0.87%. S&P 500 futures shot up 1.08%, and Nasdaq futures surged 1.77%.
U.S. oil futures sank 5.1% to $80.54 a barrel, while Brent crude tumbled 4.3% to $83.58. Gold rose 2.6% to $4,349.30 per ounce.
The U.S. dollar was down 0.25% against the euro and down 0.04% against the yen. The yield on the 10-year Treasury was plunged 5.9 basis points to 4.426%.
“Deal with the Islamic Republic of Iran is now complete. Congratulations to all! 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!” Trump posted on social media a half hour before futures began trading in the U.S.
Soon after that, Iranian President Masoud Pezeshkian said in a post on X, “Agreement reached.” Deputy Foreign Minister Kazem Gharibabadi confirmed that the U.S. and Iran will formally sign the agreement on Friday in Geneva.
Trump later added that the Strait of Hormuz would reopen on Friday, when the deal will be signed, and suggested more time was needed to remove mines in the narrow waterway.
Pakistan, which has served as a mediator during the talks, said the two countries would electronically sign the agreement on Sunday.
Ever since the U.S. and Israel launched their war on Iran in late February, global markets have been gripped with the largest oil disruption in history as Tehran closed off the Strait of Hormuz.
While Iran’s conventional forces were decimated, its Islamic Revolutionary Guard Corps retained enough combat power to scare away global shipping.
The U.S. has been unable to restore full freedom of navigation, though it carved out an alternate route through the strait to allowed a growing trickle of oil to exit the Persian Gulf.
Although the deal announced Sunday should allow Hormuz traffic to return to normal levels, representing 20% of the world’s oil and liquid natural gas flows before the war, the most contentious issues will be negotiated over the next 60 days.
For example, Iran has demanded sanctions relief and access to its frozen assets, while details of how Iran’s nuclear program will be handled remain unclear.
Trump told the Wall Street Journal that Iran agreed not to obtain nuclear weapons, but extraction of its enriched uranium could come later.
