Oil prices fall sharply amid reports of agreements between the US and Iran, increasing pressure on oilseed and fertilizer markets

The United States and Iran have reached a peace agreement aimed at ending the military confrontation between the parties, Pakistani Prime Minister Shehbaz Sharif said on Sunday. He said Washington and Tehran agreed to immediately and permanently cease all military operations. The agreement covers all areas of the conflict, including Lebanon, where tensions have been high in recent months.

The official signing ceremony of the agreement is expected to take place on June 19 in Switzerland. Before that, the mediators are expected to hold a series of meetings to agree on the technical aspects of implementing the agreements.

The US president also announced the achievement of an agreement, while Iranian representatives on state television announced their victory in the confrontation with the US.

The preliminary terms of the agreements include a 60-day cessation of hostilities, guaranteeing free passage of ships through the Strait of Hormuz, ending the US blockade of Iranian ports, partially unfreezing Iranian assets, and gradual easing of sanctions after agreement on a mechanism for controlling Iran's nuclear materials.

The oil market reacted with a sharp decline in quotes on Thursday after President Trump announced that he would cancel planned military strikes on Iran due to the start of the negotiation process. An additional factor of pressure was the information that the US military ensured the passage of more than 200 commercial vessels through the Strait of Hormuz, which allowed more than 100 million barrels of oil to be brought to the market.

August Brent crude futures closed at $87.5/barrel on Friday, down 6.9% for the week on news of progress in talks between the US and Iran. This morning, at the opening of Asian markets, quotes fell another 5% to $83.3/barrel, the lowest level since mid-April, when a ceasefire was reached.

At the same time, the market later partially recovered its losses after information emerged about the possible resignation of the Iranian president and the risks of the breakdown of the agreements reached.

A sharp drop in oil prices could significantly adjust the fertilizer and oilseed markets. Rapeseed and canola prices, as well as palm and soybean oil prices, could come under pressure first. Given the current situation, the market expects further price declines in this segment in the coming days.