LONDON – Brent crude oil prices dropped to around $86.60 per barrel on June 14, marking an 18% decline over the past month, following reports that the United States and Iran have agreed to end their conflict and reopen the strategic Strait of Hormuz. The deal, expected to be signed on Friday in Switzerland, was announced by Pakistan and confirmed by Reuters, which noted that the agreement would lift the U.S. naval blockade on Iranian ports and allow for a 60-day window for further nuclear talks.
President Donald Trump took to social media to declare the strait would open “toll free,” urging ships to “start your engines. Let the oil flow!” However, the Associated Press reported that while Trump has lifted the naval blockade, full details of the agreement remain undisclosed, and it is unclear when all maritime traffic will resume through the vital waterway.
The swift decline in crude prices from earlier war-driven highs reflects market expectations of restored supply, but analysts caution that the relief may be short-lived. The International Energy Agency (IEA) described the conflict as the largest supply disruption in history, with over 1 billion barrels lost from the Middle East and more than 14 million barrels per day of output shut in during the Hormuz blockade. Observed global stocks, including oil at sea, fell by 250 million barrels in March and April alone, partially offset by emergency reserve releases.
The U.S. Energy Information Administration’s (EIA) June report underscores persistent tightness. Even with diplomatic progress, the EIA assumes the Strait of Hormuz will remain effectively closed through the second quarter, with shipments only resuming in the third quarter and normal flows not returning until early 2027. The agency projects global oil inventories will decline by an average of 6.3 million barrels per day in Q2 and 7.6 million barrels per day in Q3, potentially pushing OECD stockpiles to levels not seen since 2003.
Market participants are also weighing the impact of demand destruction and alternative supply routes. Bloomberg columnist Javier Blas noted that China’s crude imports have plummeted to 6.7 million barrels per day in May, roughly 40% below the 2025 average, as the country leans on strategic reserves, reduced refining runs, and new pipeline flows. These factors have helped keep Brent below the $100 level that many had anticipated if the Hormuz disruption persisted.
Société Générale analyst Mike Haigh warned that emergency reserve releases cannot stabilize the market indefinitely. In a June 10 report cited by Fortune, Haigh stated that the market “will require higher prices to restore balance,” pointing to the need for rebuilding strategic stocks, maintaining commercial inventories, and incentivizing new production. “Execution is the next step,” he added, as the industry faces the challenge of refilling depleted buffers before summer demand peaks.
According to a senior Iranian official cited by Reuters, the draft memorandum includes reopening Hormuz to commercial shipping, temporarily lifting oil sanctions, freeing up $25 billion in frozen Iranian assets, and freezing enrichment activities while final negotiations continue. For oil buyers, the key question is not just when the strait reopens, but whether crude, refined products, and stockpiles can return quickly enough to meet summer demand and test the resilience of already strained global buffers.
