Oil prices declined in Asia on Monday following an announcement by Pakistan, which has been acting as a mediator to end the conflict between the US and Iran, of a deal that US President Donald Trump claimed would result in the reopening of the vital Strait of Hormuz shipping lane.
Brent crude, the worldwide oil standard, dropped 4.8% to $83.18 (Β£61.89) per barrel, while US-traded oil fell 5.6% to $80.13.
Pakistan's Prime Minister Shehbaz Sharif stated that a formal signing event will take place on Friday, 19 June in Switzerland.
Iran's Deputy Foreign Minister Kazem Gharibabadi confirmed during a phone call broadcast on state television that an agreement with the US had been concluded, while Trump wrote on social media "let the oil flow!".
However, Vandana Hari from energy market analysis firm Vanda Insights noted that the absence of specifics regarding what has been agreed upon "is likely to inject unease and uncertainty into the market."
This could lead to a week of unpredictability and fluctuations for the oil market, she added.
The Strait of Hormuz had been largely shut down since shortly after the US and Israel initiated airstrikes on Iran on 28 February.
Tehran had threatened to target vessels using the critical waterway, through which roughly 20% of the world's oil and liquefied natural gas (LNG) typically transits.
Global energy markets have experienced significant volatility in recent months, with prices frequently rising or falling sharply in response to developments in the US-Israel conflict with Iran.
Brent crude, which was trading at around $70 per barrel before the conflict began, reached a peak of about $120 during the war.
Energy market experts have also cautioned that the flow of oil through the strait is unlikely to return to pre-war levels immediately.
Andrew Lipow from consulting firm Lipow Oil Associates stated that mines would first need to be removed from the waterway, a process that could take anywhere from a few weeks to up to six months.
He also noted that there is a substantial backlog of tankers waiting to use the waterway, and that restarting oil production and bringing ship loading back to normal levels could take weeks.
Asian stock markets also rose on Monday as investors welcomed the agreement.
Japan's Nikkei 225 share index was up 5.4% in morning trading, while South Korea's Kospi gained more than 5.5%.
The region was particularly affected by higher energy prices due to its heavy dependence on the Middle East for oil and LNG supplies.