(NEW YORK) — Oil prices on Monday fell to their lowest level since March after U.S. officials announced an agreement between the United States and Iran.
West Texas Intermediate futures price, the benchmark index for U.S. trading, registered at about $80.40. That figure, which amounted to a 5% drop on Monday, marked the lowest price since March 5, just a week after the outbreak of the Iran war.
Stock prices, meanwhile, climbed on hopes of a resolution to the Iran war. The Dow Jones Industrial Average jumped 530 points, or 1%, while the S&P 500 increased 1.4%. The tech-heavy Nasdaq rose 2.3%.
Gas prices have fallen toward $4 per gallon in recent weeks, nearing the milestone as oil costs have eased in response to negotiations between the U.S. and Iran.
The national average price of a gallon of gas stands at $4.06, marking a decline of 46 cents, or 10.2%, over the past month, AAA data showed. Gas prices, however, remain $1.08 higher than where they stood before the Iran war.
The Middle East conflict prompted the Iranian closure of the Strait of Hormuz, a maritime trading route that facilitates the transport of about one-fifth of global oil supply. The standoff triggered one of the largest oil shocks ever recorded, sending gasoline prices higher.
President Donald Trump said in a Sunday social media post that the U.S. and Iran had reached a deal that will open up the strait.
“I hereby fully authorize the toll free opening of the Strait of Hormuz, and, simultaneously herewith, authorize the immediate removal of the United States Naval blockade,” Trump wrote.
“Ships of the World, start your engines. Let the oil flow!” he added.
Iranian Deputy Foreign Minister Kazem Gharibabadi confirmed the deal had been finalized and said it would be signed in Switzerland on Friday.
Trump said the strait would open after the formal signing of the deal on Friday. The oil flow is linked to mine removal, Trump noted.
Crude oil is the main ingredient in auto fuel, accounting for more than half of the price paid at the pump, according to the federal U.S. Energy Information Administration.
The U.S. is a net exporter of petroleum, meaning the country produces more oil than it consumes. But since oil prices are set on a global market, U.S. prices move in response to swings in worldwide supply and demand.
ABC News’ David Brennan and Isabella Murray contributed to this report.
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