Oil sinks below $80 as traders bet Hormuz flows will return

International crude oil prices fell below $80 per barrel on Wednesday after reports suggested that sanctions on Iranian oil exports could be eased as part of a potential peace agreement between the United States and Iran.

According to a Reuters report published on June 17, Brent crude retreated significantly from recent highs as investors responded positively to signs of improving relations between Washington and Tehran.

Oil prices had surged since late February following US-Israeli military actions involving Iran, which heightened concerns over supply disruptions and tensions in the strategically important Strait of Hormuz. The uncertainty pushed global energy markets higher in recent months.

However, expectations that Iranian oil exports could return to international markets have improved sentiment among investors and eased fears of a prolonged supply shortage.

Westpac economist Luca Belobradic said Iran's potential oil exports could meet roughly 2 percent of global demand. He cautioned, however, that any sanctions relief is unlikely to take effect immediately and will depend on the successful implementation of a lasting peace agreement.

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Reports indicate that a formal agreement between the United States and Iran could be signed on Friday, although the details of the proposed deal have not yet been made public.