Oil slips as US‑Iran deal boosts global risk appetite

Brent crude fell a little over 1 percent to below 79 dollars a barrel in Asian trade on Thursday after the United States and Iran signed an interim peace agreement to end the war and reopen the Strait of Hormuz, easing supply concerns that had driven prices higher for months. Asian equities and US stock futures advanced on the deal, even as investors continued to digest a hawkish hold from the US Federal Reserve.

Market overview

Market/Index	Movement	Comments
Brent crude futures	Around 1.1% down near 78.7 dollars	Extended decline as US‑Iran deal to reopen Strait of Hormuz took effect.
Asian stocks (regional gauge)	About 0.5% up	Tracked softer oil and improved risk sentiment after peace accord.
S&P 500 futures	0.8% up	Rebounded after prior 1.2% cash-market fall on Fed’s hawkish stance.
Nasdaq futures	More than 1% up	Tech-led gains as energy risk premia eased.
US 2‑year Treasury yield	At 4.18%	Up 13 bps after Fed signalled possible rate hikes.

• US President Donald Trump signed the memorandum at the Palace of Versailles near Paris.
• A US official said the memorandum of understanding is now in effect.
• The Fed left rates unchanged but signalled potential hikes later this year.
• Roughly half of Fed policymakers projected rate increases in 2026.

Oil and energy backdrop

Statistic	Value/Change	Context
Brent crude (Asia Thursday)	Around 78–79 dollars, down over 1%	Fell as geopolitical risk eased after US‑Iran deal.
Brent vs pre‑war level	About 7% higher	Despite drop, still above level before 28 February conflict.
Strait of Hormuz traffic	Severely reduced from peacetime	Disruption had driven the largest energy supply shock in history.

• The memorandum begins a 60‑day negotiation period on implementation.
• Iran will allow toll‑free passage through the Strait during this period.
• The US and partners must design a 300 billion dollar plan for Iran’s recovery.
• The accord targets full restoration of traffic through the Strait within 30 days.
• Pakistan Prime Minister Shehbaz Sharif mediated and announced the deal’s finalisation.
• Shipping bodies warned of limited clarity on safe routes and timings.

• “We believe the security situation for the shipping industry remains volatile”

 Jakob Larsen, Chief Safety and Security Officer, BIMCO.

Asian equities and global risk sentiment

Market/Asset	Movement	Notes
Japan Nikkei 225	Nearly 2% up	Hit record high as oil eased and deal reduced energy risk.
South Korea Kospi	Around 1–1.7% up	Benefited from softer crude and improved sentiment.
Taiwan Taiex	Up as much as 1.3%	Joined regional rally on easing supply concerns.
Hong Kong Hang Seng	1.7% down	Bucked regional gains despite global risk-on tone.
Asian stock gauge	0.5% up	Reflected broad but not uniform regional strength.

• Global macro investors said the deal should cut energy risk premia and support equities.
• Some analysts expect lower oil to ease inflation pressures in coming months.

• “This should further reduce energy-related risk premia, ease inflation concerns, and provide support for both bond and equity markets”

 Rajeev De Mello, Global Macro Portfolio Manager, Gama Asset Management.

India lens: fuel prices and rupee

Statistic	Value/Change	Context
Rupee vs US dollar	Closed at 94.50, up 10 paise	Gained as Brent slipped below 79 dollars and dollar index eased.
Recent retail fuel hike	About ₹7.50 per litre cumulative	Implemented after a 78‑day freeze to pass on crude costs.

• State-run OMCs kept petrol and diesel prices broadly unchanged on 18 June.
• The last major revision was on 25 May, following hikes starting 15 May.
• OMCs had previously absorbed much of the crude spike during the conflict.
• Elevated crude earlier led to under-recoveries for fuel retailers.

• “We expect the rupee to trade with a positive bias amid positive global market sentiments and softening of crude oil prices”

 Anuj Choudhary, Research Analyst, Mirae Asset Sharekhan.

Monetary policy backdrop in Asia and US

Authority	Movement/Signal	Notes
US Federal Reserve	Rates on hold, hawkish guidance	Half of FOMC sees hikes this year; inflation above 2% target.
Indonesia central bank	Expected 25 bps hike	Responding to earlier oil-driven inflation pressures.
Philippines central bank	Expected 25 bps hike	Also hit hard by prior oil surge.

• Fed Chair Kevin Warsh highlighted strong productivity and capital investment.
• Warsh reiterated commitment to restoring price stability despite solid growth.
• The Fed has now held rates steady for four consecutive meetings.
• Warsh announced a task force to review the Fed’s 6.7 trillion dollar balance sheet.

FX and global cross-currents

Market/Asset	Movement	Notes
Japanese yen vs US dollar	Weakened to softest since July 2024	Markets doubt pace of Bank of Japan tightening.
Japan policy rate	Raised to highest since 1995	Still seen as insufficient to stabilise yen.

• Japanese and Australian bond yields climbed, tracking US Treasury selloff.
• Deputy Governor Shinichi Uchida said the exchange rate is important but not a direct policy target.

India city-wise fuel prices on 18 June

City	Petrol (₹/litre)	Diesel (₹/litre)
New Delhi	102.12	95.20
Mumbai	111.18	97.83
Kolkata	113.47	99.82
Chennai	107.88	99.65
Bengaluru	110.89	98.80
Hyderabad	115.73	103.82
Thiruvananthapuram	115.49	104.40

• Prices in other major cities such as Gurugram, Noida and Jaipur also remained steady.
• Any sustained move lower in crude could create room for future retail adjustments.

Geopolitical terms of the US‑Iran accord

Element	Detail	Context
Memorandum name	Islamabad Memorandum of Understanding	Electronically signed by US and Iran presidents.
Mediator	Shehbaz Sharif, Pakistan PM	Announced deal had taken immediate effect.
Key provision	Toll-free passage through Strait of Hormuz	Aims to normalise global energy flows.
Reconstruction funding	300 billion dollars plan	To finance Iran’s recovery from the war.

• The accord also calls for restoring Lebanon’s territorial integrity after Israel’s offensive.
• More than 500 vessels are estimated to be waiting to exit the Gulf.
• Shipping firms still seek clarity on safe corridors and de‑mining.

• “We advise shipowners to continue doing thorough risk assessments and appeal to all parties to put the safety of seafarers first”

 Jakob Larsen, Chief Safety and Security Officer, BIMCO.

FAQ

Q: Why did oil prices fall after the US‑Iran deal?

• The agreement to end hostilities and reopen the Strait of Hormuz reduced perceived supply risk, cutting the geopolitical premium embedded in Brent prices.

Q: Have Indian petrol and diesel prices fallen after the deal?

• No, retail fuel prices across major Indian cities were largely unchanged on 18 June, with OMCs maintaining levels set after May’s cumulative hikes.

Q: How is the deal affecting the rupee and Indian markets?

• Softer Brent and a weaker dollar index supported the rupee, which appreciated by 10 paise to 94.50 per dollar, improving the macro backdrop for India’s oil-importing economy.

Frequently Asked Questions

Why did oil prices fall after the US‑Iran deal?

The peace agreement to end the war and reopen the Strait of Hormuz reduced supply disruption risk, lowering the geopolitical premium in Brent crude and pushing prices below 79 dollars a barrel in Asian trade.

Did Indian petrol and diesel prices change after the US‑Iran accord?

No, state-run oil marketing companies kept petrol and diesel prices broadly unchanged on 18 June, following cumulative hikes of about ₹7.50 per litre implemented in May after a 78‑day freeze.

How did the US‑Iran deal affect global equity markets?

Asian shares rose around 0.5 percent and US stock futures gained, with S&P 500 and Nasdaq contracts up 0.8 percent and over 1 percent respectively, as easing energy risks improved risk appetite despite the Federal Reserve’s hawkish stance.