Oil prices fell sharply after President Donald Trump announced a deal with Iran to reopen the Strait of Hormuz.

U.S. crude and Brent futures both dropped by around 4–5% following the news of the agreement.

Trump said the deal includes ending the U.S. naval blockade and allowing toll-free shipping through the strategic waterway.

He added that the Strait would reopen after a formal signing ceremony scheduled in Switzerland, CNBC has reported.

The announcement eased concerns over global oil supply disruptions, as the Strait is a critical route for a significant share of the world’s oil shipments.