Will energy prices come down after US and Iran deal?

**Sarah Rogers** (0:01)
Oil prices drop as the US and Iran agree a peace deal, but don't expect your bills to follow just yet. It's World Business Express from the BBC World Service. I'm Sarah Rogers.
Elsewhere the UK announces a ban for under 16s on social media. And in South Korea, Starbucks takes action after a marketing stunt goes wrong.
Yes, oil prices fell to a three month low on the news that the US and Iran have reached a deal to stop the war in the Middle East. Brent crude, the global benchmark, dropped 5% to around $83 a barrel, still much higher than when the war began. Now, the framework for peace is due to be signed in Switzerland on Friday. Our World News correspondent, Joe Inwood, has more.

**Joe Inwood** (0:49)
So what do we know is definitely in the deal? Well, at the moment, very little. Both sides agree the Strait of Hormuz will reopen. It will also pause any fighting for 60 days.
Now, that brings to an end, in theory, more than 100 days of war that caused chaos across the Middle East and had far-reaching economic consequences.

**Sarah Rogers** (1:10)
One of those consequences, a global energy shock. Now, US President Donald Trump posted, let the oil flow on social media. But what is happening in the Strait of Hormuz at the moment? Navin Das is senior analyst at energy and shipping data firm Kepler.

**Navin Das** (1:25)
No real change since the announcement came out. What we have seen is one Iranian chemical tanker has passed, which potentially implies that the US naval blockade has been lifted. Realistically, the market is still very much on tenterhooks.

**Sarah Rogers** (1:43)
Which is very different to what the message that's been sent out to the world is.

**Navin Das** (1:49)
I think people who have been following this market extremely closely, trading it on all number of commodities or even on a tanker, have developed a healthy level of cynicism or maybe skepticism. And I think that's still very much present.

**Sarah Rogers** (2:02)
And so how long might it take for us to get to some kind of degree of normalcy? It's not a simple case of fuel up the ships and watch them go, is it?

**Navin Das** (2:12)
Very true, very true. I think there's a lot of different sticking points on the supply chain. I think sitting on top of that first and foremost is trust. You know, we were speaking to a few ship brokers, a few shipping agents this morning. And there really is a case of wait and see and waiting for the first movers, let's say maybe those who are slightly more risk prone to enter via the Strait and exit and for other shipers to sort of monitor this for the likes of, let's say, five days to a week. Aside from that, it's the question of redistributing global vessels that have now been pulled, let's say, more into the Atlantic, into the US Gulf.

**Sarah Rogers** (2:49)
Because some of them are simply in the wrong place at the moment, aren't they?

**Navin Das** (2:53)
Exactly. So it's basically getting the ships back to where they need to be, and then really seeing how the mechanism of vessels exiting takes place. Which route do they take? How quickly can they leave? So all of these different parts of the supply chain need to be working in tandem very smoothly for us to see some sort of normalcy. I think a realistic range for us to, let's say, get back to a more normal world would be eight weeks from now, so two months. But that does mean that everything, including the agreement and all the parts of the supply chain need to be working.

**Sarah Rogers** (3:25)
Navin Das from Kepler. We're listening to that Rachel Winter, Partner and Investment Manager at Killik & Co. Wealth Management. Just give us a bit more detail, positive market reaction to that news, Rachel.

**Rachel Winter** (3:36)
Yes, so oil at the moment down about five and a half percent, so quite a significant move on the day. It's also down to a three month low, so that really shows that people are feeling quite positive about this new deal. It also means that equities are up today because lower oil prices mean lower energy prices, lower inflation. That tends to be good news for the global economy.

**Sarah Rogers** (3:55)
When benchmark oil went over $100 a barrel, energy and fuel prices shot up pretty quickly, didn't they? When might we see them fall?

**Rachel Winter** (4:03)
Difficult to say. I would hope they would start to come down quite soon, but we need to bear in mind that there has been quite a lot of damage to a lot of the oil refining and the gas equipment, and that will prevent those energy prices from coming down as quickly as we might like.