Oil prices tumbled after President Trump said the U.S. has reached a deal with Iran that will reopen the Strait of Hormuz, a vital Middle East waterway that accounts for roughly 20% of global crude. 

U.S. stocks soared in early trading on optimism that the deal will bring relief to businesses and consumers after May inflation hit its highest level in more than three years.

Brent crude, the international benchmark, fell $4.22, or 4.8%, to $83.11, while West Texas Intermediate, the U.S. standard, tumbled $4.41, or 5.2%, to $80.47. 

The S&P 500 jumped 111 points, or 1.5%, in early trading to 7,543, while the Dow Jones Industrial Average gained 510 points, or 1%, to 51,713. The tech-heavy Nasdaq composite index surged 2.2%.

President Trump said the Strait of Hormuz will reopen on Friday after the deal is signed, and the U.S. naval blockade on Iran will be lifted.

Despite the cessation of hostilities in Iran, it may take several weeks for oil tanker traffic through the Strait of Hormuz to reach even 50% of its pre-war levels, according to analysts with political risk consultancy Eurasia Group. Energy experts said shipping and insurance companies will want to be confident the pact will hold, ensuring that oil and gas flows out of the region resume. 

While gas prices could ease in the coming weeks, they’re unlikely to return to pre-war levels anytime soon, which could continue to put financial pressure on U.S. households and businesses, experts said.

“Even if the deal reopens the strait immediately, it will not prevent inflation from rising a bit further in the near term, nor will it avoid some economic damage during Q3,” Capital Economics group chief economist Neil Shearing told investors in a report on Monday.

Another question hanging over the truce is whether Iran will charge ships for passage through the strait. The U.S. has demanded that the waterway remain toll-free.

The deal comes after the Consumer Price Index in May rose to its highest level in more than three years, with energy prices accounting for more than 60% of the monthly inflation increase. While fuel prices have eased slightly in June, as the CBS News gas and oil price tracker shows, that decline was not captured in the May data.

Even with the recent dip in gas prices, Americans are still paying 37% more at the pump than they did prior to the start of the war. The average national price for a gallon of gasoline on Monday was $4.07, down from $4.53 a month ago, according to AAA.