I. Introduction

The US and Iran have officially signed a historic 14-point Memorandum of Understanding (MOU) to end their 110-day war, lift the naval blockade, and reopen the Strait of Hormuz. The interim deal, signed by US President Donald Trump at the Palace of Versailles and Iranian President Masoud Pezeshkian in Tehran, takes immediate effect and establishes a maximum 60-day window to negotiate a permanent UN-endorsed peace treaty. [1]

The agreement was due to be signed at an official ceremony in Switzerland on June 19, 2026, but the White House and Iranian state media confirmed it had been signed earlier.

Earlier on June 17, 2026, in a briefing with journalists including from the ABC, a senior US official read out the full text of the 14-point document. Key details of the 14-Point Agreement, which the Trump administration describes as “performance-based,” are as follows: [2]

• Permanent ceasefire: Both countries declare an immediate end to military operations on all fronts, explicitly including the theater in Lebanon, requiring Iran to rein in Hezbollah.
• Strait of Hormuz reopening: Iran must restore safe commercial maritime traffic within 30 days and will permit toll-free transit through the strait for the next 60 days.
• US blockade and sanctions relief: The US will end its naval blockade within 30 days and issue immediate waivers for Iranian oil exports, petroleum products, and associated banking transactions.
• Nuclear program concessions: Iran reaffirmed that it will not develop nuclear weapons. Under International Atomic Energy Agency (IAEA) supervision, Iran has agreed to “down-blend” and dispose of its existing highly enriched uranium stockpile.
• Frozen assets and reconstruction: The US will release frozen Iranian funds only after terms are implemented. In addition, the US and regional partners will map out a $300 billion reconstruction fund for Iran’s development, although the US is not required to contribute directly.
• Non-interference: Both countries pledge to respect each other’s territorial integrity and refrain from interfering in internal affairs.

Despite this breakthrough, significant diplomatic and strategic friction points remain unresolved:

• Israel’s stance: Israel was not a party to the talks between the US and Iran. Israeli Prime Minister Benjamin Netanyahu noted that he and Trump “do not always see eye to eye,” signaling that Israel does not feel bound by the Lebanon clauses and may continue to launch strikes against Hezbollah. Iran has counter-warned that continued Israeli military operations in southern Lebanon would breach the MOU.
• Domestic political backlash: US President Trump has faced criticism from congressional Republicans and conservative commentators who compare the framework to the 2015 Obama-era deal, expressing concern over allowing Iran to enrich any uranium or expand its regional reach.
• Fragile timeline: If a comprehensive deal is not completed during the 60-day window, Trump warned that the US is prepared to pivot back to military action. [3]

With this information on the US-Iran peace deal in mind, this paper will analyze the impacts of this deal on global oil price.

II. Overview of US-Iran war, February 2026-currently

Since February 28, 2026, the US and Israel have been at war with Iran and its regional allies such as Hezbollah. Active hostilities broke out after surprise US–Israeli airstrikes targeting military and government sites in Iran resulted in the assassinations of Iranian officials, most notably including Iranian Supreme Leader Ali Khamenei. These attacks were launched amidst ongoing US-Iran negotiations, which were being held to address Iran’s nuclear program. Iran retaliated by launching military strikes on Israel, on US-aligned Arab nations, and on US military bases across the Gulf region; and by effectively blocking the Strait of Hormuz, which has disrupted the global economy by causing an energy crisis. Iran’s response broadened the scale of the war by prompting retaliatory strikes from Kuwait, Saudi Arabia, and the United Arab Emirates.

In Iran, US–Israeli airstrikes damaged military bases, government buildings, hospitals, schools, and heritage sites, while also inflicting civilian casualties in Iran. In retaliation, the Iranian military launched hundreds of drones and ballistic missiles at Israel and at numerous countries in the Gulf region (as well as at US military bases inside their territory), including Bahrain, Kuwait, Oman, Jordan, Qatar, Saudi Arabia, and the United Arab Emirates, as well as the Kurdistan Region of Iraq. Drones or missiles attributed to Iran also appeared to target Türkiye, Azerbaijan, and the British territory of Akrotiri and Dhekelia on Cyprus island. At the same time, the Israel-Hezbollah conflict escalated into the 2026 Lebanon war, which has since killed more than 2,000 civilians and militants in Lebanon.

On June 14, 2026, the US and Iran announced an agreement to end the war and reopen the Strait of Hormuz. Under this agreement, the US blockade of Iranian ports will be lifted, the Strait of Hormuz will be reopened, and Iranian crude oil exports are scheduled to resume.

III. The Impacts of the outbreak of US-Iran war and the closure of the Strait of Hormuz on global oil price

Following the closure of the Strait of Hormuz on March 5, 2026, as Figure 1 shows, oil and LNG exports were stranded, causing Brent Crude to surge past $120 per barrel and forcing Qatar and Kuwait to declare force majeure on oil exports.

Figure 1: Map of the Strait of Hormuz (source: http://www.drishticuet.com)

As Figure 2 shows, shipping traffic through the Strait of Hormuz has dramatically dropped in March and April 2026 after Iran declared the closure of the Strait on March 5, 2026. Even the US carried out the blockage of Iranian ports on April 13, 2026. As a result of the dual blockage of the Strait of Hormuz by Iran and the US, shipping traffic through it has dramatically dropped in March and April 2026.

In particular, the passage of oil tankers (light blue) transporting crude oil has almost ceased in March 2026 compared to February. The only alternative routes are two pipelines, in Saudi Arabia and the United Arab Emirates, which allow part of the oil production to be rerouted to the Red Sea and the Gulf of Oman. However, oil shipping through these alternative routes has been limited.

Figure 2: Traffic through the Strait of Hormuz, February, March, April 2026 (source: IMF Portwatch & Statista)

Consequently, according to shipping data from Kpler, combined exports of crude oil from Saudi Arabia, Iraq, Kuwait, Oman, Qatar, and the UAE dropped from 469 million barrels in February 2026 to 263 million barrels in March 2026 – a significant decline of 206 million barrels, or 44 percent, as Figure 3 shows.

Figure 3: Significant drop in crude oil exports from six Gulf states in 2026 (source: Kpler and Aljazeera)

As a result, global oil prices surged as the US-Iran War broke out on February 28, 2026, and crude oil exports from Gulf States through the Strait of Hormuz became virtually impossible. Following the outbreak of the US-Iran War on February 28, 2026, as shown in Figure 4, Brent crude prices fluctuated between $100 and $110 per barrel from March to May, after hovering around the $70 per barrel mark in February 2026.

Figure 4: Brent crude oil price (source: Financial Times)

IV. Impacts of the US-Iran peace deal and the reopening of the Strait of Hormuz on global oil price

There are divided opinions on whether global oil price will “drop like a rock” as US President Trump claims following the US-Iran peace deal on June 14, 2026.

Figure 5: Brent crude oil price falls on US-Iran peace deal in Mid-June, 2026.

As Figure 5 & 6 shows, Brent crude oil price has recently plunged due to the high hope of the end of the US-Iran War.

In the wake of the agreement announced on June 14, 2026, Brent crude oil futures have fallen roughly 30% from their mid-crisis peak to around $78. That’s 8-10 USD above where oil was trading when US and Israeli attacks on Iran started on February 28. US West Texas Intermediate futures fell to roughly $75.

Figure 6: Brent crude oil price (source: Trading Economics)

Figure 7: WTI crude oil price (source: CNBC)

Regarding the outlook for international oil prices following the signing of the US-Iran peace agreement, global financial firms such as Goldman Sachs and Morgan Stanley predict that international oil prices will fall significantly compared to the time of the US-Iran War.

For example, Goldman Sachs lowered its fourth-quarter Brent crude oil price forecast to $80 from $90 and cut its 2027 average estimate to $75 from $80, after the US and Iran signed a preliminary agreement to reopen the Strait of Hormuz.

Goldman Sachs also predicted that WTI will be closing out in 2026 around $75. The bank sees Gulf States’ oil exports normalizing to prewar levels by the end of July, with regional production resuming by October.

Morgan Stanley has also lowered its Brent crude oil price forecast for the fourth quarter of this year by $15 per barrel to $80, after the US and Iran signed a preliminary agreement to end the war in the Gulf region.

“From here, it likely takes several weeks for oil tanker flow to be restored; we see 50% of production back by September, and 80% by December, slightly faster than before,” Morgan Stanley said in a note late on June 15. [4]

However, some analysts warn that it may take a considerable amount of time for oil prices to recover to pre-US-Iran War levels. They argue that a cautious approach is necessary because several key issues in the peace agreement, such as toll collection, remain unresolved.

“Don’t expect a return to pre-war levels soon,” says Morningstar director of equity research Allen Good. “Shipments will still take time to reach the oil market, while storage will need to be replenished. This will likely set a higher floor for oil prices than before the War.” [5]

Even some analysts express more skepticism. Capital Economics expects it to take two to three months for oil production to return to 80% of pre-war levels. It similarly sees oil prices ending the year roughly around current levels, though it warns of a potential near-term spike.

“I wouldn’t rule out the oil price rising in the near term,” says David Oxley, chief climate and commodities economist at Capital Economics. He suggests that renewed focus on energy security and replenishing depleted global inventories could maintain upward pressure on oil prices. [6]

With opinions on future global oil prices divided, whether or not global oil prices will “plummet” as President Trump has promised depends on several factors.

Major risk factors hindering the rapid resumption of crude oil exports from the Gulf states include the resurgence of conflict in the Gulf region, the potential presence of mines in the Strait of Hormuz, and the possibility of Iran re-blocking maritime shipping routes. While forecasting that international oil prices will fall, Goldman Sachs predicts that if any of these factors occur and disrupt transit through the Strait of Hormuz for the remainder of this year and through 2027, Brent crude prices could remain at the $130 level.

The first factor to affect future global oil price is the possibility that the 60-day peace negotiations between the US and Iran will fail.

If the negotiations collapse, analysts warn that oil prices are highly likely to rebound within a few months as crude oil shipments through the Strait of Hormuz plummet and inventory levels fall to critical levels. Prior to the peace agreement, Wood Mackenzie predicted that US crude oil inventories could reach critical levels within one to two months, potentially causing oil prices to stay around $140 per barrel.

Allen Good, Director of Equity Research at Morningstar, said, “If the agreement between the US and Iran fails, we can expect the energy market to return to its current state. That is, while some volumes will be transported through the Strait of Hormuz, the amount transported will be much smaller than before the war, and reliance on crude oil storage facilities will continue. This situation is unsustainable, and with inventories already significantly depleted, it is highly likely that global oil prices will rise much further to meet the high demand required.” [7]

Iranian Foreign Minister Abbas Araghchi even mentioned the possibility of negotiation collapsing, stating that the US-Iran War is “not completely over” unless Israeli forces withdraw from the territories they occupied during the current conflict.

Minister Araghchi told that Israel’s withdrawal from Lebanon is a prerequisite for a peace agreement with the US. Minister Araghchi’s remarks came amid growing concerns that Israel could undermine diplomatic efforts to end the US-Iran War, particularly as US President Trump criticized Israel, an US ally and war partner, as irresponsible.

A Hezbollah press officer also revealed that they had received assurances from Iran that they would demand the withdrawal of Israeli troops from Lebanon during the 60-day negotiation phase with the US.

At the G7 summit, Trump strongly criticized Israeli Prime Minister Benjamin Netanyahu, urging Israel to “act more responsibly” in Lebanon, and condemned Israel’s recent bombing of Beirut as a “vicious act.” [8]

As Israel’s actions in Lebanon pose a threat to the US-Iran peace plan to end the war, European leaders express significant concern about the sustainability of the peace agreement. European countries were at the center of negotiations to conclude the Joint Comprehensive Plan of Action (JCPOA), a nuclear arms reduction agreement with Iran, in 2015; However, they were completely excluded from the US decision to start the US-Iran War and the process involved, in 2026 and were also excluded from negotiations to end the war with Iran, which dealt a major blow to the European economy.

Moving forward, the second factor is the supply chain disruptions. Resolving oil supply chain issues takes a considerable amount of time.

First, global oil production plummeted due to the US-Iran war. According to the International Energy Agency (IEA), since the outbreak of the war, crude oil production of more than 14 million barrels per day – or 14% of global demand – has ceased.

John Deal, Managing Director of Capital Markets at the investment bank Post Oak, said that it will take some time to normalize oil production.

Moreover, stocks of crude oil in the US Strategic Petroleum Reserve fell to 340.3 million barrels, the lowest level since 1983. Since the outbreak of the war, stockpiles have decreased by as much as 18%.

Deal stated, “international crude oil prices could remain high throughout the summer due to increased demand while strategic reserves in the US and other countries are being refilled.” [9]

Demand for aviation fuel will also place a burden on consumers from June to August 2026, which is typically the peak travel season in the US and other regions. Deal said, “Airlines are facing significant difficulties in planning summer operations and forecasting the situation due to the US-Iran war.”

Last April, United Airlines CEO Scott Kirby announced that airfares could increase by up to 20% due to rising oil prices.

John Deal said, “I think high oil demand will persist throughout this summer, and it will likely be after the summer, perhaps around September or October, before gasoline prices recover to pre-war levels.” [10]

Mark Jones, a professor of political science at Rice University, said that “Middle Eastern oil-producing countries may be reluctant to resume crude oil production until they are confident that the ceasefire will continue.” [11]

This agreement is premised on a 60-day negotiation period between the US and Iran. “Many oil producers may be reluctant to resume production until they are convinced that peace will persist in the Gulf region. This is because they most want to avoid a situation where they have invested massive sums to restart production only to have conflicts erupt again, forcing them to halt operations once more,” Professor Jones told Al Jazeera.

Whether oil production resumes also depends on the scale of damage suffered by Gulf states and oil producers during the US-Iran war.

Badeer Nooruddin, research director at Vitol Bahrain, told Reuters that refineries that had suspended operations as a precaution could recover up to 95% capacity within 40 to 60 days. However, oil facilities damaged by the war could take much longer to recover.

International energy expert Mamdouh Salameh said that international oil prices would not easily return to pre-US-Iran War levels. In an interview with Asharq Al-Awsat, Salameh said that “The current situation demonstrates that Iran controls 20% of the world’s oil and gas supply by blockading the Strait of Hormuz. Therefore, oil prices following the US-Iran agreement must reflect a permanent price premium resulting from Iran’s control of the Strait of Hormuz.”

Salameh also added that even if the Strait of Hormuz is reopened, “the volume of oil passing through the Strait will fall to half of pre-war levels due to damage to oil production facilities in the Gulf region.” [12]

He predicted that it would take approximately eight to twelve months to repair some oil facilities. “For this reason, Brent crude will not return to pre-war levels of $60–$65 per barrel but will maintain a level of $85–$90 for the next several years,” he told.

In addition to supply chain disruptions, issues of crude oil supply and demand are also lurking.

Amin Nasser, CEO of Saudi Aramco, estimated that an additional supply loss of approximately 100 million barrels occurs in the oil market whenever the blockade of the Strait of Hormuz continues. Crude oil supply has already decreased by about 1 billion barrels due to the recent US-Iran War and the blockade of the Strait of Hormuz.

In mid-May, CEO Nasser said that these supply shortfalls are being covered by drawing from each country’s strategic and commercial reserves.

Approximately 20% of the world’s oil supply passes through the Strait of Hormuz. The blockade is testing the limits of global strategic reserves and has presented a significant challenge to the global energy sector. This is clearly demonstrated by the fact that the International Energy Agency (IEA) and its member states have drawn from strategic reserves.

Global oil demand is estimated to increase by 700,000 to 900,000 barrels per day this year. This suggests that demand will remain strong for a long time, even after the Strait of Hormuz is reopened, due to the need for daily crude oil demand for power generation and general consumption, as well as the necessity to restore inventories.

According to Wood Mackenzie, crude oil fields in the Gulf region that have ceased production are expected to recover to 70% of previous levels within three months and approximately 90% within six months.

Therefore, regarding future crude oil prices, international oil expert El-Gendy stated that unless tensions in the Gulf region escalate again, oil prices are likely to move at around $80 per barrel — higher than pre-war levels — as countries must replenish their stocks and strategic reserves depleted by releasing them over the past few months amidst reduced crude oil supply, and as China’s demand recovers to pre-war levels. Furthermore, he noted that there is room for further price increases.

The third factor is bottlenecks in the Strait of Hormuz, which, according to John Deal, could be the biggest obstacle. “Improving shipping capacity takes time. Improving shipping capacity will likely be the biggest constraint,” Deal said. [13]

This is because, according to Kpler shipping data, more than 3,000 vessels are still waiting to pass through the Strait of Hormuz.

According to Bloomberg, as shown in Figures 8 and 9, traffic in the Strait of Hormuz was severely restricted during the US-Iran War; compared to the usual daily average of 135 vessels passing before the war, only about 10 vessels passed per day.

As a result, as shown in Figure 10, the total number of vessels trapped in the Gulf within the Strait of Hormuz as of June 15, 2026, stands at approximately 3,478, maintaining a level of around 3,000 from mid-May through mid-June.

It will take several weeks for vessels bound for various parts of the world to reach their destinations, dock at ports, and unload their cargo. “Currently, it takes several months for an oil tanker to reach its final destination and return. Therefore, from a shipping perspective, we expect it will take until early autumn to restore crude oil supply to pre-US-Iran War levels,” said Professor Jones. He noted that uncertainty regarding the timing of the resumption of normal shipping is acting as a barrier to prevent oil prices from falling further, thereby curbing a sharp drop in oil prices.

This means that numerous empty vessels are waiting in ports to load cargo and resume normal operations.

Major shipping companies are currently maintaining a wait-and-see stance. Norway’s Wallenius Wilhelmsen and Denmark’s Maersk told Reuters that there would be no significant changes to operations in the Middle East despite the announcement of the peace agreement.

As Figure 8 & 9 show, during the war, there was limited passage through the Strait of Hormuz, with an average of 10 ships a day passing through, compared with 135 that normally transit the waterway, according to an analysis by Bloomberg.

Figure 8: Ships passing through the Strait of Hormuz, 2026 (source: UN global Platforms & Portwatch)

Figure 9: As of June 16, 2026, Hormuz In/Out Traffic & Transit Logs (source: https://www.shipfinder.com/special/hormuz)

Figure 10: As of June 15, 2026, the number of total vessels in the Gulf (source: https://www.shipfinder.com/special/hormuz)

In fact, according to the BBC, despite the peace agreement between the US and Iran, there is a view that there is still a long way to go before transit through the Strait of Hormuz is normalized. Concerns over mines buried in the Strait of Hormuz persist, and complex issues such as insurance disputes and the possibility of Iran imposing tolls are intertwined, suggesting that it may take a considerable amount of time for actual ship traffic to return to pre-US-Iran War levels. Under these circumstances, if Iran, having realized the power of control over the Strait of Hormuz, were to once again resort to a blockade, the process of normalizing navigation could become even more complicated.

The biggest reason why shipping companies hesitate to resume passage through the Strait of Hormuz is safety. Although the Strait has opened following the peace agreement, assurance regarding safety remains insufficient. Since effectively blockading the Strait of Hormuz in late February 2026, Iran has been firing on vessels attempting to pass through without its permission.

With few shipping companies willing to take on the risk before others, the shipping industry is seeing a “wait-and-see” game unfold over who will be the first to pass through the Strait. This is because even though the strait has been officially opened, actual ship movements are only possible if shipowners, charterers, insurers, and cargo owners all accept the navigational risks. Experts say that while captains, shipowners, and insurers are deploying vessels in the Gulf to move on to the Arabian Sea following the agreement announcement, few are willing to set sail first. Martin Kelly of the crisis management firm EOS Risk Group told the BBC that “It takes considerable courage to pass through the Strait of Hormuz in the current situation.” [14]

The shipping industry is particularly concerned about naval mines. Early in the war, Iran threatened to deploy “various types of sea mines, including floating mines that can be dropped from the shore” in the Gulf if its coastlines or islands were attacked by the US. The US and international maritime organizations believe that mines may actually have been laid in some areas. The Joint Maritime Information Centre (JMIC) and Oman’s Maritime Security Centre issued warnings regarding “floating objects” suspected to be mines, and US Secretary of State Marco Rubio said before a US Senate committee that Iran had “laid mines in a significant portion of the Strait of Hormuz.” [15]

Arsenio Dominguez, Secretary General of the International Maritime Organization (IMO), said, “Mine removal is an essential first step to restoring maritime traffic to pre-war levels.” A report by the US Department of Defense to Congress last April also raised the possibility that complete mine removal could take up to six months.

The United Kingdom and France have dispatched naval vessels to the region in preparation for potential mine removal operations in the Strait of Hormuz.

British Prime Minister Keir Starmer pledged that the UK would “do its utmost” to reopen the Strait of Hormuz “as soon as possible.” The British naval support ship RFA Lyme Bay, equipped with mine-clearing equipment, was also spotted via maritime tracking in waters near the Akrotiri Air Base in Cyprus.

Cost is also a stumbling block. Iran argues that its right to demand transit fees for the Strait of Hormuz must be recognized in future agreements with the US, while the US insists on opening the Strait without transit fees. Although an agreement was reached between the two countries allowing to pass through the Strait of Hormuz without tolls during the upcoming 60-day negotiation period, shipping companies are forced to be more cautious as the future handling of this transit issue has not yet been fully resolved. Insurance premiums have also skyrocketed since the US-Iran War. The process of coordinating insurance costs and coverage conditions between shipping companies and insurers following the US-Iran agreement could delay the normalization of transit.

There are also concerns that the Strait of Hormuz could solidify into a strategic deterrent for Iran following this war. On June 16, 2026, CNN reported, citing sources, that “US intelligence assesses that Iran can effectively block access to the Strait of Hormuz whenever it wants in the future.” The source claimed that with this agreement, “the US has effectively handed over control of the Strait of Hormuz to Iran,” adding that “this control is a weapon more powerful than nuclear weapons.” [16]

However, there is also a view that it will be difficult for Iran to actually proceed with a renewed blockade of the Strait of Hormuz. This is because the Strait of Hormuz is a critical passage crucial for the energy imports and exports of not only Iran but also major oil-importing countries such as China and Japan, as well as neighboring Gulf States like Saudi Arabia, Qatar, and the United Arab Emirates. If Iran were to block the Strait again, the possibility of backlash from Iran’s ally China and neighboring countries cannot be ruled out.

Consequently, even if an actual blockade of the Strait of Hormuz does not occur, it appears unlikely that shipping companies and insurance companies will rush to resume transit as long as the perception remains that Iran can use the Strait as leverage in negotiations. This is why weight is being given to the view that the normalization of the Strait will take place in stages. It is expected that traffic volume will gradually increase after some vessels first pass through the Strait on a limited basis to verify the safety of the shipping lanes, while monitoring factors such as mine clearance, insurance conditions, and Iran’s transit procedures. Dimitris Ampatzidis of Kpler told the BBC, “While the Strait could be reopened quickly on political and military levels, the process of normalizing the commercial shipping system is likely to take much longer.” [17] Therefore, as crude oil exports from Gulf countries will inevitably remain limited unless the issue of safe passage through the Strait of Hormuz is completely resolved, it appears that it will take a considerable amount of time for international crude oil prices to fall significantly.

V. Conclusion

This paper analyzed the impact of the US-Iran peace agreement, announced on June 17, 2026 (local time), on global oil prices. To this end, the paper first provided an overview of the US-Iran War and then explained that the outbreak of the war and the blockade of the Strait of Hormuz had a significant impact on the surge in international oil prices.

Finally, regarding the impact of the US-Iran peace agreement on global oil prices, this paper explained that opinions are divided on whether international oil prices will fall significantly, as claimed by US President Trump. In this regard, the paper detailed the argument that it will take a considerable amount of time for international oil prices to drop significantly due to the possibility of failure in the final negotiations for the agreement between the US and Iran, the possibility of delays in crude oil supply increase, and bottlenecks in the Strait of Hormuz.