Oil
Susan Abayomi
The global oil prices plunged below $80 per barrel after the United States and Iran announced a deal to end their war and reopen the Strait of Hormuz. The development sent crude benchmarks to three-month lows as traders unwound the war-risk premium that had built up since the conflict began in late February 2026.
According to the report and other outlets, President Donald Trump posted on Truth Social on Sunday, June 15, that “The Deal with the Islamic Republic of Iran is now complete”. He authorized the “toll free opening of the Strait of Hormuz” and the immediate removal of the U.S. naval blockade on Iranian ports, writing, “Ships of the World, start your engines. Let the oil flow!”. A memorandum of understanding was signed by Trump, Vice President JD Vance and Iranian parliament Speaker Mohammad Bagher Qalibaf.
The Strait of Hormuz, closed for more than three months since US-Israel strikes on Iran began on February 28, handles about 20% of the world’s crude oil and LNG supply. Iran’s semi-official Mehr news agency said the draft deal calls for reopening the waterway within 30 days under Iranian arrangements. Pakistan’s Prime Minister Shehbaz Sharif, who mediated talks, confirmed the deal would be formally signed in Switzerland on Friday, June 19, 2026.
Markets reacted immediately. West Texas Intermediate for July delivery fell $4.13 to $4.85, settling around $80.03–$80.75 per barrel, while Brent crude dropped $4.16 to $4.25, settling near $83.08–$83.17. Both benchmarks hit their lowest levels since March 4, 2026. Intraday, WTI touched $79.50 and Brent $82.87. This marks a sharp reversal from war-time peaks near $119–$126 per barrel.
The selloff reflects expectations of restored Iranian oil exports and normalized Gulf shipping. Citi cut its Q3 and Q4 2026 Brent forecasts to $75 and $70 per barrel, citing resumed Hormuz flows. Dennis Kissler of Bok Financial said, “With a wall of oil supply very possibly on the way, the selloff looks justified”. Iran also lowered its July official selling price for Asian buyers to $7.15 above Oman/Dubai, down from a $13 premium in June.
The deal extends a ceasefire by 60 days while a final agreement is negotiated. Key unresolved issues include Iran’s nuclear program and sanctions relief. Iran’s Deputy Foreign Minister Kazem Gharibabadi said the deal puts an “immediate end” to the war. The E4 — UK, France, Germany, Italy — said Sunday they are ready to lift sanctions on Iran in response to nuclear steps.
Despite the price drop, analysts caution that supply won’t normalize overnight. The Strait needs to be de-mined, tankers must resume safe passage, Middle East production has to restart, emergency reserves need refilling, and damaged infrastructure requires repair. Rystad Energy’s Claudio Galimberti noted, “sentiment is not the same as supply”. ANZ analysts warned oil may stay elevated because infrastructure has been damaged.
Broader markets rallied on the news. Dow futures rose 400 points, Nasdaq futures 485 points, and S&P 500 futures 75 points. U.S. gasoline prices dipped below $4 a gallon nationally, though they remain above pre-war levels when WTI was near $72. This headline reflects how quickly geopolitical shifts can reset energy markets: from war premium to peace dividend in a single trading session.
