Washington: US President Donald Trump predicted a sharp decline in global oil prices if a proposed agreement with Iran is finalised, arguing that greater stability in the Middle East and the reopening of key shipping routes would ease pressure on energy markets. 

Speaking at the White House, Trump said markets had already responded positively to news of the emerging agreement.

“Stock markets up 1000 points,” Trump said. “That means they like the deal.”

He said oil prices had already begun moving lower and suggested further declines could follow once the agreement is signed.

“Oil's dropped,” Trump said. “Oil will start coming down too, I think even lower than it was before.”

The President linked falling energy prices to broader economic benefits.

“When oil comes down, everything else comes down,” he said.

Trump said a key component of the proposed arrangement with Iran would be the reopening of maritime routes in the Gulf region.

“The Strait will open as soon as we have it signed,” he said.

Asked whether restrictions linked to the maritime blockade would be lifted immediately after the agreement takes effect, Trump replied: “Yes that's true it's part of the deal and we'll have oil prices dropping like a rock.”

Trump argued that the United States had already been maintaining the flow of energy shipments through the region despite tensions.

“We brought many, many ships across and millions, hundreds of millions of barrels of oil were brought across,” he said.

The President described the agreement as a significant step towards stabilising one of the world's most important energy-producing regions.

“We have a deal that Iran will never have a nuclear weapon,” Trump said. “It's a great deal.”

According to Trump, the agreement is in the final stages of preparation and could be signed within days.

“It's a very detailed memorandum of understanding,” he said. “Everybody wants it done.”

The President also suggested that the easing of tensions would benefit American farmers and consumers by reducing costs associated with fuel and transportation.

“The farmers have a problem with fertilizer but that's all coming down now,” Trump said. “Your fuel is going to be lower.”

Energy markets have remained highly sensitive to developments involving Iran because of the country's strategic position near the Strait of Hormuz, a narrow waterway through which a substantial portion of the world's seaborne oil exports passes each day.

For India, lower crude prices could have significant economic implications. India imports more than 85 per cent of its crude oil requirements, making international energy prices a major factor affecting inflation, government finances and household fuel costs.