Oil prices have dropped to levels last seen before the war in the Middle East as the crucial Strait of Hormuz reopens gradually following the US-Iran peace deal.
Brent crude fell back to below $73 a barrel for the first time since the Iran war started on February 28, down around 2% to $72.24 a barrel at one stage.
It sparks hope of easing cost-of-living pressures as prices begin retreating at the petrol pumps thanks to the drops in wholesale cost of crude.
The declines follow last week’s interim agreement to end the war and the reopening of the Strait of Hormuz, through which a fifth of the world’s oil and gas is normally shipped.
The US and Iran signed a memorandum of understanding on Friday lasting 60 days, which has seen the US partially lift sanctions on Iranian oil exports.
Leaders from both countries now have two months to hammer out the details of a final and lasting deal, which will also include assurances over Iran’s nuclear programme.
While the interim deal has already been tested, some ships are beginning to pass through the vital strait, said to be carrying crude oil, liquefied natural gas (LNG) and fertilizer, as well as some goods.
Susannah Streeter, chief investment strategist at the Wealth Club, said: “Fears of a long-lasting global energy crunch induced by the Iran conflict are slinking away, with oil prices sinking back towards pre-crisis levels.”
She added: “The chokehold on the Strait of Hormuz has been released, tanker traffic is flowing more freely, and supply concerns are fading.
“There’s still a long way to go to clear the backlog and fully meet demand, but with oil-producing nations turning on the taps and repairs to infrastructure ongoing, oil prices are on the decline.”
Oil and energy prices soared after the conflict started, with crude hitting $120 a barrel at one stage.
The war saw the Strait of Hormuz effectively blocked for nearly four months and the knock-on impact led to fears over soaring inflation worldwide