By Benadeta Mwaura - Reporter
Iran, June 15, 2026 - Global oil prices fell sharply on Monday after Pakistan announced that the United States and Iran had reached a preliminary agreement to end months of hostilities, raising expectations that the critical Strait of Hormuz could soon fully reopen to commercial shipping.
Brent crude futures, the international benchmark used to price Kenya's fuel imports, dropped by more than 4 percent to trade at around $83.82 per barrel, while U.S. West Texas Intermediate (WTI) crude fell to approximately $80.95 per barrel in early Asian trading.
The decline follows an announcement by Pakistani Prime Minister Shehbaz Sharif, who said Washington and Tehran had agreed to a framework aimed at ending the conflict that has disrupted global energy markets since February. According to Sharif, the deal is expected to be formally signed in Switzerland later this week.
Under the proposed agreement, Iran would reopen the Strait of Hormuz to commercial shipping while the United States would lift its naval blockade on Iranian ports within 30 days. The draft framework also reportedly includes temporary waivers on oil sanctions and the release of some Iranian assets frozen abroad.
The Strait of Hormuz is one of the world's most strategically important energy corridors, handling roughly a fifth of global oil supplies. Concerns over disruptions in the waterway had pushed crude prices higher in recent months, fueling fears of rising inflation and higher fuel costs worldwide.
The prospect of increased Iranian oil exports and the restoration of normal shipping traffic has eased supply concerns, triggering the latest sell-off in crude markets.
However, investors remain cautious as several issues remain unresolved, including negotiations over Iran's nuclear programme and the durability of the proposed ceasefire. The draft agreement provides a 60-day window for further talks on these issues.
For Kenya, the decline in global oil prices could offer some relief to consumers and businesses if the trend is sustained.
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Kenya imports all of its refined petroleum products, making domestic fuel prices highly sensitive to movements in international oil markets and exchange rate fluctuations.
The latest drop comes just days before the next review of local fuel prices by the Energy and Petroleum Regulatory Authority, which adjusts pump prices monthly based on global fuel costs, freight charges and the exchange rate.
Although changes in global crude prices do not immediately translate into lower pump prices, sustained declines could ease pressure on inflation and reduce transport and production costs across the economy.
The fall in oil prices also signals how quickly geopolitical developments continue to influence energy markets, with diplomacy proving just as powerful as conflict in shaping global supply expectations.