US-Iran peace deal set to reopen Strait of Hormuz, but mines and stranded ships threaten quick energy market recovery

The peace deal terms

A memorandum of understanding was reached and is set to be formally signed in Switzerland on Friday. The accord would end the US-Israeli war with Iran that began on February 28 and immediately allow Iran to sell oil freely. Washington would secure at least $300 billion to rebuild Iran and work to lift all US and UN sanctions if a final nuclear agreement is reached. The deal also calls for an immediate end to fighting in Lebanon between Israel and Hezbollah, though Israeli officials have said they will continue to defend themselves and occupy Lebanese territory.

Shipping hurdles

Despite the diplomatic breakthrough, the Strait of Hormuz remains littered with mines laid by Iran and is jammed with more than 500 vessels stranded by the war, according to ship-tracking firm Kpler. BIMCO, one of the world’s largest shipping associations, warns the risks are not yet resolved.

We still consider it very risky for ships to commence transit.

Maersk echoed the caution, saying it welcomed the initial peace deal but that “at this stage, there are no changes to our operations in the region.” The White House expects energy flows to return to pre-war levels “in short order,” spokeswoman Taylor Rogers said. President Trump told reporters Tuesday that the strait would be fully opened by Friday and that “oil is starting to go and prices are coming down rapidly.”

Oil market impact

Brent crude fell roughly 0.5 percent to $78.78 a barrel on Wednesday, extending a nearly 16 percent drop since the previous Wednesday and edging closer to the pre-war level of around $70. US physical crude prices are easing as the wartime demand premium evaporates and Middle Eastern barrels look set to return. A third Iran-linked crude carrier has already left Chabahar port and crossed the US blockade line toward Asia.

The total exports of Iran could account for around two percent of global demand.

He cautioned that any sanctions relief would likely be gradual and conditional on a lasting peace. The International Energy Agency projected global oil supply would jump in the third quarter from the 95.6 million barrels per day estimated for the mostly closed-strait second quarter.

Europe's gas resilience

Europe’s natural gas market has weathered the near-total closure of Hormuz without fracturing. Average prices surged by around €10 per MWh, or 31 percent, since the conflict began, but ample US deliveries and larger volumes from Algeria and Nigeria helped fill the gap. There were no major infrastructure bottlenecks, and price increases remained broadly equal across member states. One strain: Russian LNG imports rose about 17 percent in the first five months of the year, even as the bloc aims to cut ties with Moscow. Modelling a worse scenario combining a Hormuz disruption with a full ban on Russian gas shows only a modest additional price increase of 0.4–1.4 euros per MWh, thanks to new regasification terminals and cross-border interconnectors.

Outlook

Tanker operators warn that even after a formal reopening, normal Hormuz transit could take weeks to resume, while QatarEnergy reported that Iranian attacks wiped out 17 percent of its capacity for up to five years. The deal’s longer-term elements, the reconstruction fund, full sanctions relief and nuclear negotiations, remain contingent on further talks. For now, markets are breathing easier, but the physical return of free-flowing energy is still days or weeks away.