Global oil prices have done a convincing impression of a submarine - plunging to a three-month low - while stock markets celebrated by hitting a record high, all because there might finally be a peace deal between the US and Iran, thus ending the energy supply crisis that has been the market's uninvited guest since March.
Brent crude dropped about 4% to around $83 per barrel on Monday, as optimism that the Strait of Hormuz might reopen for business sent wholesale gas prices in Europe down 6%. Wall Street's Dow Jones rose about 1% to a record high, and the Russell 2000 index of small US companies also hit a new high, rising about 0.8%, as investors collectively exhaled.
Donald Trump announced on Sunday that a deal was "now complete," despite recent Israeli airstrikes on Beirut that had threatened to derail the delicate negotiations. The US president took to social media to declare: "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!" An hour later, he clarified that the strait would open after the peace deal is signed on Friday, adding, "for purposes of mine removal, oil will flow on both ends again for the Region, and the World!"
Details remain hazy - such as the exact timing of the strait's reopening, who will oversee safe passage, and whether any conditions apply. Iranian authorities have said there will be a 60-day negotiating period for a final deal covering wider issues like Tehran's nuclear program and sanctions relief.
Brent crude extended Friday's falls to just over $82 a barrel, its lowest since March 10. The oil price began tumbling late last week from $93 a barrel on Thursday to close at $87.50 on Friday, after Trump hinted at a peace deal that would end Iran's chokehold on the oil trade route.
Global stock markets rallied: the UK's FTSE 100 opened up 0.8% before settling to flat, while France's CAC 40 and Germany's DAX rose just over 1%. Shares in oil companies like BP and Shell fell sharply. In Asia, Japan's Nikkei and South Korea's Kospi jumped 5%, and China's CSI 300 rose 1.9%.
Trump also claimed the US military had been secretly moving millions of barrels of oil a day through the strait in recent weeks to ease market pressure. Oil prices have stayed lower than expected throughout the Iran war, which halted Gulf oil exports through the strait in early March, effectively removing 20 million barrels a day - a fifth of global supplies - from the market. Gulf producers have rerouted about 5 million barrels a day via pipelines, and a further 2 million barrels a day may have moved via "dark tankers" shuttling cargoes undetected to vessels in the Gulf of Oman.
Still, 38 Japanese-linked vessels remain stuck in the Strait of Hormuz, according to the Japanese Shipowners' Association, which wants to "wait a little longer for more concrete information" about the expected deal, to be signed in Switzerland by June 19.
Meanwhile, the International Energy Agency has released a record level of emergency crude and fuel at about 2.5 million barrels a day. China has reduced imports by about 4 million barrels a day to decade-low levels, drawing on record-high inventories instead of stockpiling. Globally, demand may have fallen by 3 to 4 million barrels a day as Asian refineries cut back.
Tony Sycamore, an analyst at IG, warned that countries will use a reopening to replenish depleted stockpiles and strategic reserves, and that negotiations - especially on nuclear issues - remain complex, making it "hard to see crude falling much further from here in the near term."