The Strait of Hormuz, under the control of both the United States and Iran [Photo courtesy of Yonhap News/AFP]

International oil prices plummeted by more than 5% on expectations of a peace agreement between the United States and Iran.

However, uncertainty remains as U.S. President Donald Trump stated that a naval blockade on Iran would be maintained until a final agreement is reached.

According to Bloomberg and other sources, the July futures price for West Texas Intermediate (WTI) crude oil fell as much as $5.35 (5.53%) to $91.25 per barrel at one point during trading on the 24th (local time).

July Brent crude futures also fell $5.57 (5.38%) to $97.97 per barrel at one point during trading.

This reflects the expectation that the Middle East conflict, triggered by a large-scale military attack by the U.S. and Israel, could be resolved after about 80 days.

Market relief appears to have increased after U.S. President Donald Trump announced on his social media platform Truth Social the previous day that he had discussed a 'Memorandum of Understanding related to peace' for a ceasefire with Iran with leaders of Arab countries around Iran, and that "the agreement has been largely negotiated."

President Trump also posted on Truth Social on this day, stating that "(negotiations with Iran) are proceeding in an orderly and constructive manner."

The agreement, which the U.S. and Iran are reportedly close to signing, is said to include a 60-day extension of the ceasefire, the reopening of the Strait of Hormuz, and the commencement of negotiations to limit Iran's nuclear program.

However, uncertainty persists as President Trump stated, "We will not rush into an agreement" and "the negotiations are not yet completely concluded."

The Trump administration is striving to normalize navigation through the Strait of Hormuz to stabilize domestic prices ahead of the midterm elections in November this year.

It is understood that the U.S. included provisions in the draft Memorandum of Understanding (MOU) with Iran to take measures to restore traffic volume in the Strait of Hormuz to pre-war levels within 30 days of signing.

The Washington Post (WP) reported this, citing an anonymous diplomat familiar with the matter, and stated that the latest proposal for the MOU draft is awaiting approval from the Iranian side.

Even if the Strait of Hormuz is reopened, it is anticipated that it will take a considerable amount of time for oil production from suspended wells to resume and for shipping to normalize, leading to stability in international oil prices.

Hamed Huseyn, a commodities economist at Capital Economics, said, "The trend of falling prices will only emerge when the supply-demand balance in the oil market improves substantially, and this is likely to happen after 2027."