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Oil Crashes 4.7% After Trump-Iran Deal Reopens Hormuz Strait

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Oil Crashes 4.7% After Trump-Iran Deal Reopens Hormuz Strait

2026-06-15 01:19 UTCBy AlphaScala Research DeskSource reporting: livemint.comEditorial standards

Oil Crashes 4.7% After Trump-Iran Deal Reopens Hormuz Strait

Brent crude fell 3.95% to $83.88 after the US-Iran peace deal reopened the Strait of Hormuz. The supply math points to 1.5 million barrels per day returning to market, with OPEC+ facing a strategic choice on output.

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What affects gold prices?

Oil prices crashed more than 4% on Monday after the United States and Iran agreed to a peace deal that reopens the Strait of Hormuz and ends more than three months of war. Brent crude fell 3.95% to $83.88 a barrel. West Texas Intermediate dropped 4.68% to $80.91. Both contracts had already slid more than 3% on Friday.

The deal, announced Sunday by Pakistani Prime Minister Shehbaz Sharif, calls for an "immediate and permanent" end to military operations on all fronts, including Lebanon. US President Donald Trump confirmed the agreement on social media, authorizing the "toll free opening of the Strait of Hormuz" and the removal of the US naval blockade. "Ships of the World, start your engines. Let the oil flow," Trump posted.

Iran's Deputy Foreign Minister Kazem Gharibabadi said the deal puts an "immediate end" to the countries' war. Talks for a "final agreement" are scheduled within two months. A signing ceremony is set for June 19 in Switzerland.

The Strait of Hormuz is the world's most critical oil chokepoint. Roughly 20 million barrels of crude and refined products pass through it daily, about a fifth of global consumption. The blockade and naval operations had removed a significant portion of that supply from the market, pushing Brent above $90 in late May. The reopening removes that supply risk in a single stroke.

The supply math

The immediate price reaction reflects the restoration of roughly 1.5 million to 2 million barrels per day of Iranian crude that had been effectively locked out of global markets by sanctions and the blockade. Iran's pre-war production was about 3.2 million barrels per day, with exports running near 1.5 million. The blockade had cut that to near zero. The deal also removes the risk premium on all Gulf crude shipments, which had added an estimated $3 to $5 per barrel to spot prices since April.

What comes next for oil

The deal includes a 14-point memorandum of understanding that, according to Iran's Mehr news agency, provides for the release of $24 billion in frozen Iranian assets over a 60-day negotiation period. The US, UK, France, Germany and Italy issued a joint statement saying they are prepared to lift relevant sanctions in response to "clear, verifiable steps by Iran on its nuclear programme."

For oil markets, the key question is how quickly Iranian barrels return to the market. Tanker tracking data suggests Iran has roughly 50 million barrels of floating storage, much of it on vessels that can reach buyers within days once sanctions and insurance restrictions are lifted. A full return of Iranian exports would add roughly 1.5 million barrels per day to global supply, enough to push the market from a modest deficit into surplus by the fourth quarter.

OPEC+ faces a strategic choice. The group is already planning to unwind 2.2 million barrels per day of voluntary cuts starting in October. Adding Iranian barrels on top of that unwind could push prices below $75, a level several OPEC members need to balance their budgets. Saudi Arabia, which led the blockade coalition, may slow its own production increases to absorb the Iranian supply.

The risk that remains

The deal is not final. The 60-day negotiation period covers nuclear program verification, sanctions relief sequencing, and the disposition of Iran's stockpile of highly enriched uranium, which US strikes buried last year. Any breakdown in those talks would reintroduce the supply risk. For now, the market is pricing the most likely path: a gradual return of Iranian barrels over the next two quarters.

US Vice President JD Vance told Fox News he plans to attend the Geneva signing. He said Trump could also attend. UN Secretary-General Antonio Guterres called the deal a "critical step" toward resolving the Middle East conflict.

Japan's Nikkei stock index jumped 3% on the news, reflecting the broader market relief that a major geopolitical risk has been removed. For oil traders, the trade has shifted from betting on supply disruption to betting on the pace of supply restoration.