Oil slides toward three-month low as US and Iran prepare Strait of Hormuz deal
Crude prices extend their longest losing streak this year as a US–Iran agreement to end the war and reopen the Strait of Hormuz, expected to be signed Friday, promises to restore 15–20% of global oil supply.
The announced memorandum of understanding between Washington and Tehran, unveiled by Donald Trump on 14 June, has sent oil prices into a four-session slide that wiped roughly 16% off West Texas Intermediate. Global benchmark Brent, which stood well above $110 a barrel in May, ended Tuesday below $79, the lowest level since early March.
Ships of the World, start your engines! Let the oil flow!
Deal architecture and immediate steps
The agreement calls for the US Navy's blockade of Iranian ports to be lifted within 30 days, a 60-day cease-fire to negotiate a permanent settlement, and sanctions waivers that let Iran begin oil exports immediately. Iran-linked tankers have already begun repositioning ahead of the Friday signing, according to Iranian media.
Conflicting accounts fuel uncertainty
Differences over key provisions emerged within 48 hours of the announcement. The Trump administration insists the strait will be considered reopened only if Iran forgoes transit tolls, yet Iranian officials said on Monday they would charge fees on passing ships. Separately, Iran contends the cease-fire includes a halt to Israel's military operations in Lebanon; American officials explicitly deny that.
Price rout and market reaction
Brent for August delivery dropped 5.17% to $78.87 late Tuesday, and WTI for July shed 5.93% to $75.96. The run marks the longest daily losing streak for oil this year. European equities extended their record-high close from Monday, lifted by the prospect of a reliable Hormuz transit corridor.
- Brent crude tops $110 per barrel during war-driven supply squeeze.
- Trump announces memorandum of understanding with Iran to lift blockade and reopen the strait.
- Oil extends losses: Brent at $78.87, WTI at $75.96; US reportedly grants upfront sanctions waivers.
- Expected signing of the agreement between the United States and Iran.
- Deadline to lift the US Navy blockade and reopen the Strait of Hormuz under the deal.
Analysts race to mark down forecasts
Goldman Sachs, one of several Wall Street banks revising estimates, cut its fourth-quarter Brent forecast to $80 a barrel from $90 and lowered its 2027 average to $75. The revisions reflect a market rapidly pricing in the return of up to a fifth of the world's customary oil and LNG volumes.
Why the deal could still unravel
The Economist cautions that the memorandum has yet to be formally signed and could be derailed by skirmishes or disputes over Iran's nuclear programme and the transit-fee disagreement. Trump told The New York Times that strikes on Tehran will resume if Iran does not agree to end that programme. Shipping executives say they will need weeks or months of assurances before sending vessels back to the Persian Gulf, raising the prospect of a Red Sea-style limbo even after the signing.
