Global oil prices have fallen following the announcement of a US-Iran peace deal which is hoped will reopen the Strait of Hormuz.

US President Donald Trump announced in a social media post last night (Sunday, June 14) that the US and Iran had reached an agreement to bring the ongoing war in the Middle East to an end.

He also said that the US will end its naval blockade on the country.

"I hereby fully authorise 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!," Trump said.

Strait of Hormuz

The Food and Agriculture Organization of the United Nations (FAO) previously warned of an impending global food crisis due to the closure of the Strait of Hormuz.

The narrow stretch of water between Iran and Oman is one of the world's busiest shipping channels for oil, liquefied natural gas (LNG) and fertilisers.

Trade through the strait has been largely blocked since the outbreak of the war in Iran at the end of February.

Last night's announcement has brought optimism that the Strait of Hormuz could reopen by the end of this week.

Pakistan, which has served as a mediator between the countries, has confirmed that the deal is due to be formally signed on Friday (June 19) in Switzerland.

"Following intensive talks, we are pleased to announce that the Peace Deal between the United States of America and Islamic Republic of Iran has been reached.

"Both sides have declared the immediate and permanent termination of military operations on all fronts, including in Lebanon," Shehbaz Sharif, Prime Minister of Pakistan, said.

The full details of the deal are yet to be revealed.

Brent crude oil prices dropped by over 4% toward $83 per barrel today on the back of the announcement.

Agreement

European Commission President Ursula von der Leyen welcomed the agreement reached between the US and Iran, "following sustained diplomatic efforts by several partners".

"The priority now is its swift and full implementation by all parties.

"Freedom of navigation must be restored toll-free. This is essential for regional stability and the global economy.

"It opens the door to broader negotiations on peace and security in the Middle East," she said.

"Of course there can be no peace in the Middle East while Lebanon is in flames.

"Once again Europe calls on all parties to respect Lebanon's sovereignty and territorial integrity and implement a genuine ceasefire," von der Leyen added.

Peace deal

United Nations (UN) secretary general Antonio Guterres said the deal "represents a critical step towards the peaceful settlement of the conflict".

Minister for Foreign Affairs Helen McEntee also welcomed the deal between the US and Iran.

"I hope there can now be a full engagement by all involved to implement this agreement, address all issues including Iran’s nuclear programme, and achieve a just and lasting peace across the region.

"The situation in Lebanon is deeply concerning and must also be addressed.

"I will be discussing these latest developments with my EU colleagues when we meet today in Luxembourg," she added.