London, June 13, 2026 – Oil fell to the lowest since the early days of the Iran war on signs that flows through the Strait of Hormuz are rising and on progress toward an interim peace deal.
Brent futures fell 3.4% to settle at $87.33, the lowest since March 5, and ended the week down 6.2%. West Texas Intermediate settled 3.2% lower on Friday, while European gas slumped as much as 8.4%.
The US and Iran are edging closer to an agreement to reopen the Strait of Hormuz that could be signed as the Group of Seven world leaders meet next week, senior officials said. But conflicting messages between Washington and Tehran continued to cast doubt on that timeline. The war has ushered in the biggest supply disruption in history, roiling energy markets and damaging the global economy.
In addition to hopes around peace, the decline in prices has been accelerated by markets finding workarounds to the closure of the Strait of Hormuz, a chokepoint for about a fifth of the world’s oil before the war. In recent weeks, a rising number of ships have been crossing the waterway with their satellite signals off, while a plunge in Chinese imports and surge in American exports have also helped balance markets.
Even if the interim peace deal is finalized and the strait is reopened, “we’ll still have constrained supplies,” said Rob Haworth, a senior investment strategist at US Bank.
Oil prices are down about 30% since the peak of the conflict. Markets were oversupplied before the war broke out in February, and Brent crude, the global benchmark, had been hovering near $70 per barrel.
Shipowners are closely watching peace talk developments, and some tanker owners are expressing caution about the strait’s potential reopening. Others were already predicting a frantic free-for-all if the waterway opens in earnest.
Iran’s Foreign Minister Abbas Araghchi said in a social media post Friday that a memorandum of nderstanding between the two sides has “never been closer.” The conciliatory tone bolstered market expectations that an end to the conflict, now in its fourth month, may finally be within reach, as Iranian officials have been more restrained than their US counterparts in signaling progress toward a deal.
Yet for all the progress, there was little clarity as to what the text of the so-called memorandum of understanding will contain and both sides offered differing descriptions. The disconnect is raising doubts about how quickly Hormuz can return to anything approaching its pre-war operations.
Haworth said ships transiting the Strait of Hormuz to Asia, the primary market for Persian Gulf suppliers, would take two months to get there and back.
Even then, many countries would still prefer to buy American crude over barrels coming out of the Persian Gulf, said Scott Shelton, an energy specialist at ICAP.
“The market is going to look to diversify away from them, at least in the near-term,” Shelton said, “because Iran’s pretty much figured out that it’s not very hard to close that strait.”
Investors are treating the latest diplomatic developments with caution after several earlier claims of imminent breakthroughs proved unfounded. The resulting volatility has pushed open interest on the global Brent benchmark to the lowest level in more than a year as traders cut back on risk exposure.
At the same time, the global supply cushion is rapidly being pushed to its limits. Chevron Corp. Chief Executive Officer Mike Wirth warned on Friday that inventories are declining toward “uncomfortable” levels. Exports of oil from the US emergency reserves are pouring out of the country in record volumes.
In European gas markets, there have been elevated bullish positions of late, potentially adding impetus to declines as trader adjust their positions.
The news on a potential deal seems to have led market players “to want to close out some long position before the weekend,” said Tom Marzec-Manser, director of Europe gas and LNG at Wood Mackenzie. (Bloomberg)
