US stocks rallied and oil prices tumbled on Monday after the United States and Iran confirmed a framework agreement to end their conflict and reopen the Strait of Hormuz, easing the war-risk premium that had gripped energy markets for weeks. The S&P 500 rose 1.6% at the opening bell, the Nasdaq Composite jumped 2.5% and the Dow Jones Industrial Average added about 545 points.
West Texas Intermediate, the US crude benchmark, slid more than 5% to around $80.50 a barrel — its lowest level since early March — while international benchmark Brent fell about 4.5% to roughly $83. Both grades have now given back most of the spike that followed the closure of the Strait, though WTI remains up around 40% for the year.
The moves extend a relief rally that began last week as the outlines of a deal emerged. President Donald Trump authorised an end to the US naval blockade of Iranian ports, and Pakistan, which mediated the talks, said a formal signing would take place Friday in Switzerland. Iran has confirmed the framework but signalled that implementation will not begin until the document is signed.
Roughly a fifth of the world's seaborne oil passes through the Strait of Hormuz, and traders had bid crude sharply higher on fears that a wider war could choke the chokepoint. The prospect of tankers moving freely again removed much of that premium, though analysts cautioned that physical flows could take weeks to normalise.
Several strategists warned the rally could prove fragile because the agreement is not yet signed. "Whether they go much lower is highly questionable," one analyst said of oil prices, noting that any breakdown before Friday — or a failure to reach a final nuclear accord — could send crude back up quickly. Trump has said strikes could resume if Iran does not follow through.
Energy shares lagged the broader advance as falling crude weighed on producers, while airlines, cruise operators and other fuel-sensitive sectors gained. Gold eased and US Treasury yields rose modestly as investors rotated out of haven assets and back into equities.