Stock futures rose sharply Sunday evening as oil prices dropped following President Donald Trump’s announcement of a peace deal with Iran. The agreement appears to end months of military tensions in the Middle East.
Hostilities had closed the Strait of Hormuz, a critical waterway for global oil shipments. The disruption triggered an oil shock that weighed on the worldwide economy.
Markets reacted swiftly to the news. S&P 500 futures gained more than 1%, while Dow futures climbed over 300 points.
Crude oil futures fell by roughly 8% in early trading. Brent crude, the international benchmark, dropped below $60 per barrel.
The peace deal removes a major source of geopolitical uncertainty that had gripped investors. Analysts had warned that prolonged conflict could push oil prices significantly higher.
Trump did not provide specific terms of the agreement. He confirmed the deal was reached after direct talks between U.S. and Iranian officials.
The Strait of Hormuz, through which about 20% of global oil passes, is now expected to reopen. Shipping insurance rates in the region are likely to decline.
Energy stocks may face pressure Monday as lower oil prices squeeze profit margins for producers. Conversely, airlines and transportation companies stand to benefit from reduced fuel costs.
The broader market rally suggests investors are rotating back into risk assets. Safe-haven investments like gold and U.S. Treasuries saw immediate selling pressure.
Economists cautioned that the deal’s durability remains uncertain. Previous ceasefires in the region have collapsed.
