NEW YORK: Oil prices dropped below US$80 a barrel Tuesday (Jun 16) on optimism over the promised reopening of the Strait of Hormuz, easing inflation pressures on global economies.

The slide accelerated to more than five per cent after The Wall Street Journal reported that Washington could ease sanctions on Iranian crude as part of the deal to end the Middle East war, allowing Tehran to immediately sell crude and refined oil products.

International benchmark Brent North Sea crude ended at US$78.96 a barrel, down 5.1 per cent.

The main US oil contract, West Texas Intermediate, dropped 5.8 per cent to US$76.05 a barrel.

Oil industry experts and shipping companies have cautioned that the restoration of normal operations after the strait's near shutdown will take time.

But markets view the situation as much improved compared with the worst-case scenario of continued fighting with no timeframe on the vital waterway's reopening, analysts said.

Iranian media reported that three oil tankers and two cargo ships had already passed through the strait.

Meanwhile, Wall Street stocks had a mixed day, with the Dow rising to a second consecutive record close, while the S&P 500 and Nasdaq retreated.

Briefing.com analyst Patrick O'Hare described the movements as a rotation.

"We're not seeing a mass exodus out of the market," said O'Hare, who views the dynamics as consistent with a bull market.

Europe's main markets closed higher, while Asia ended mixed.

"Although the deal has not been formally signed, there already appears to be a peace dividend for markets," said Kathleen Brooks, research director at trading group XTB. 

"We are seeing European markets play catch-up with the US, and this could continue, as some European indices remain below their pre-war levels," including London's FTSE 100 index, she added. 

Tehran blockaded the strait after the United States and Israel launched strikes against Iran on February 28. Washington later halted shi...