Oil prices extended their slide on Wednesday, June 17, 2026, as hopes for a peace agreement between the US and Iran, including the reopening of the Strait of Hormuz, gained traction. Brent crude futures for August delivery dipped nearly 1%, building on 5% declines from the previous two days, reaching $78.24 a barrel by 08:00 GMT. This marks the lowest price since March 3, three days after the war began. Despite an initial surge of over 50% during the conflict, Brent crude is now only about 7% higher than its pre-war price of February 28. Similarly, US benchmark West Texas Intermediate (WTI) crude traded at $75.34 per barrel, down 0.93%, while Brent slipped 0.68% to $78.42.
The decline comes as Washington and Tehran are reportedly moving to formalize an interim agreement. This deal is expected to reopen the Strait of Hormuz, ease sanctions on Iranian oil exports, and initiate new negotiations on Iran's nuclear program. Energy markets are also factoring in the potential return of millions of barrels of Iranian crude to international markets. Vandana Hari, founder of Vanda Insights, noted that while the memorandum of understanding (MoU) has brought relief, the "hardest part, on delivering the pledges and promises, is yet to come," warning that the market might be "front-running the prospective reopening of the Strait of Hormuz.
The Strait of Hormuz, a critical shipping route that typically carries a fifth of global crude oil and liquefied natural gas supplies, has seen maritime traffic reduced to a trickle due to the threat of Iranian missiles, drones, and mines. This reduction in traffic has cut global oil supply by an estimated 14 million barrels per day. The full reopening of the strait is considered a crucial step to restore confidence in energy supply chains after nearly four months of turmoil. However, challenges remain, including clearing naval mines and a backlog of over 500 vessels waiting to exit the Gulf, meaning a full recovery in global energy flows could take months. Insurers are also still charging elevated war-risk premiums, and many shipowners are awaiting confirmation of mine-free sea lanes before resuming normal operations.
The agreement, which President Donald Trump signed with Iran on Wednesday, calls for Tehran to dilute its stockpile of highly enriched uranium and waives US-backed sanctions, immediately allowing Iran to sell its oil freely. This initial deal, taking "immediate effect," aims to end hostilities and begin a 60-day negotiation period for a final agreement on Iran's nuclear program. A US official stated that Iran would be allowed to sell oil once the pact is signed, with draft terms reportedly including sanctions waivers for Iranian oil exports while broader financial relief would be negotiated later. This concession for immediate oil sales, compared to the 2015 nuclear deal where sanctions were lifted only at its conclusion, is seen as a significant gain for Iran.
The initial deal also stipulates that the US will lift a blockade on Iranian ports and that the Strait will return to pre-war traffic levels within 30 days, although Iranian mines may need to be destroyed. Stephen Cotton, general-secretary of the International Transport Workers' Federation, cautioned that the signing ceremony is "at best the beginning," and a return to normal shipping patterns could be weeks, if not months, away due to backlogs and crew changes. Despite the peace deal, industry officials suggest that a full return to pre-war production and refining levels could take weeks, months, or longer, limiting how far prices can fall. Market uncertainty remains high, with Israel distancing itself from the agreement, raising doubts about its long-term stability. Still, the US Department of Energy reported an 8.3 million-barrel draw in crude stocks for the week ended June 12, larger than the expected 4.6 million-barrel decline, signaling a still-tight market beneath the diplomatic relief.
