Iran-US Strait of Hormuz Deal Sends Oil Prices Tumbling 12%
4d ago|4 min readStandard
Fazen Markets Editorial Desk
Collective editorial team · methodology
crude-oilstrait-of-hormuz
Fazen Markets Editorial Desk
Collective editorial team · methodology
Trades XAUUSD 24/5 on autopilot. Verified Myfxbook performance. Free forever.
Risk warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The majority of retail investor accounts lose money when trading CFDs. Vortex HFT is informational software — not investment advice. Past performance does not guarantee future results.
A reported diplomatic agreement between the United States and Iran to de-escalate military tensions and reopen the Strait of Hormuz to unhindered shipping triggered a sharp decline in global oil prices. News of the potential deal, reported on June 15, 2026, sent front-month Brent crude futures tumbling approximately 12% in early Asian trading. The benchmark fell to an intraday low of $72.50 per barrel, its lowest level in over eighteen months, as markets priced in a significant reduction of the geopolitical risk premium embedded in energy contracts.
The Strait of Hormuz is the world's most critical oil transit chokepoint, with an estimated 21 million barrels per day, or about 21% of global petroleum liquids consumption, flowing through it. The last major supply disruption from the region occurred in 2019, when attacks on tankers and Saudi oil infrastructure temporarily removed over 5 million barrels per day from the market, spiking prices by nearly 20%. The current risk premium had been building throughout 2026 amid escalating tit-for-tat actions, including seizures of commercial vessels and targeted airstrikes.
This diplomatic breakthrough follows a prolonged period of heightened tension that saw the US naval presence in the Persian Gulf at its highest level since the Iraq War. The catalyst for the agreement appears to be back-channel negotiations facilitated by Oman and Qatar, focusing on a mutual rollback of hostilities in exchange for a limited sanctions waiver for Iranian oil exports. The deal arrives as global inflation remains stubbornly above central bank targets, making energy price stability a top priority for Western governments.
The current macro backdrop featured Brent crude trading in a $85-$95 range, largely supported by OPEC+ production cuts and the persistent Hormuz risk premium. The sudden removal of this premium directly impacts the inflation outlook for the second half of 2026. Central bankers have repeatedly cited energy volatility as a key uncertainty for monetary policy, making this development a significant input for upcoming interest rate decisions.
The immediate market reaction was severe and broad-based across the oil complex. Front-month Brent crude futures contract for August delivery plummeted $9.85, or 12.1%, to trade at $72.50 per barrel. The West Texas Intermediate (WTI) benchmark saw a parallel decline, falling 11.8% to $68.15. The sell-off erased over $120 billion in market capitalization from the global energy sector within hours, as tracked by the SPDR Energy Select Sector ETF (XLE), which fell 8.5% in pre-market trading.
The price collapse also triggered a dramatic shift in the forward curve structure. The market moved from a state of backwardation, where near-term prices are higher than later-dated ones, into contango, signaling an anticipated supply surplus. The six-month spread for Brent flipped from a backwardation of $1.20 per barrel to a contango of $0.80.
| Metric | Pre-News (June 14 Close) | Post-News (June 15 Low) | Change |
|---|---|---|---|
| Brent Crude | $82.35 | $72.50 | -12.1% |
| WTI Crude | $77.25 | $68.15 | -11.8% |
| XLE ETF | $95.60 | $87.50 | -8.5% |
This price action dwarfed the movements in broader equity indices. While the S&P 500 futures indicated a 0.8% opening gain on the reduced inflation fears, the volatility index for oil (OVX) surged 45% to 48, indicating extreme market stress.
The most direct impact is on energy producers and oilfield service companies. Integrated majors like Exxon Mobil (XOM) and Chevron (CVX) face immediate pressure on upstream profitability, while pure-play exploration and production firms such as EOG Resources (EOG) are more severely affected. The US Energy Select Sector Index is projected to underperform the broader market by 15-20% in the near term. Conversely, transportation and industrial sectors stand to benefit substantially. Airlines like Delta Air Lines (DAL) and United Airlines (UAL) rallied over 5% in pre-market trading, as jet fuel is their largest operational cost.
A key counter-argument to a sustained price collapse is the discipline of the OPEC+ alliance. The group has previously shown a willingness to enact deeper production cuts to defend a price floor, likely around $70-$75 for Brent. An emergency OPEC+ meeting has already been flagged for the coming week, creating a potential near-term bottom for prices. Market positioning data indicates that hedge funds held near-record net long positions in crude futures, suggesting the sell-off could be exacerbated by a rapid unwinding of these leveraged bets. Flow analysis shows heavy selling from systematic commodity trading advisors (CTAs) triggering automated sell programs.
The stability of the agreement itself is the primary catalyst. Any sign of backtracking from either Washington or Tehran would instantly reverse the price move. The next scheduled OPEC+ meeting on June 30th is now a critical event, where members may announce new production cuts to stabilize the market. The weekly US crude inventory report from the Energy Information Administration on June 18th will be scrutinized for demand signals.
Technical levels to watch include the 200-week moving average for Brent crude at $70.50, which has served as major long-term support. A sustained break below this level could target a move toward $65. On the upside, former support around $80 now becomes a significant resistance zone. The market will also monitor the US Dollar Index (DXY); a weaker dollar could provide some support for commodity prices, potentially muting the decline.
The sharp drop in crude oil prices, the primary cost component of gasoline, will translate to lower prices at the pump within 1-2 weeks. Analysts project a decrease of 25-40 cents per gallon for US consumers, providing significant relief from transportation costs. This disinflationary effect is expected to be most pronounced in regions like the US East Coast and West Coast, which rely heavily on imported gasoline and are more sensitive to global crude benchmarks than the US-focused WTI price.
Vortex HFT is our free MT4/MT5 Expert Advisor. Verified Myfxbook performance. No subscription. No fees. Trades 24/5.
Trade oil, gas & energy markets
Start TradingSponsored
Open a demo account in 30 seconds. No deposit required.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.