Following a tentative peace deal between the United States and Iran, announced on June 15 and scheduled for formal signing in Switzerland, oil prices experienced a notable drop. Brent crude fell by about 5% to roughly $82-$83 per barrel, while West Texas Intermediate (WTI) dropped to approximately $80, marking their lowest levels since the conflict began on February 28. This deal aims to reopen the Strait of Hormuz, a critical shipping route for 20% of the world's oil and liquefied natural gas, which had caused prices to peak at about $120 per barrel during the conflict.
Despite the immediate fall in crude oil prices and a rally in global stock markets, energy analysts caution that the return to normal market conditions and lower fuel prices will not be immediate. It is estimated that it will take months, not days or weeks, for full relief to be felt. This delay is attributed to several factors including the need for mine clearance in the Strait of Hormuz (expected to take 40-50 days), repositioning of commercial vessels (around 500 are currently stuck), rebuilding depleted strategic national stockpiles like the US Strategic Petroleum Reserve (which expended 75 million barrels), and repairing damaged Middle East energy facilities, some of which could take up to five years.
Moreover, the full impact of Iranian oil returning to the market is expected to be gradual. Even with a best-case scenario and sanctions lifted, the EIA estimates Iranian crude output could reach 3.8 million barrels per day within six months, but much of its export infrastructure has been degraded. The International Energy Agency (IEA) projects a global supply shortfall of 1.78 million barrels per day in 2026, with world oil demand contracting by 420,000 barrels per day year-over-year. This suggests that returning Iranian oil will likely fill an existing structural gap rather than immediately crashing prices due to an oversupply.
