LONDON (Realist English). Global oil prices have completed a full cycle of decline, returning to levels last seen before the US‑Israeli war against Iran began on February 28.
During trading on June 25, Brent crude fell below $72.48 per barrel – the closing price on the eve of the conflict. The US benchmark WTI approached its pre‑war level of $67.02, dropping to $69 per barrel.
The decline in Brent over the past four trading sessions has exceeded 10%, and from its peak of $126 reached on April 30, the price has collapsed by 42%.
Strait of Hormuz Unblocked: Tankers Sailing with Transponders On
The main driver of the collapse was the restoration of shipping through the Strait of Hormuz following the signing of the interim memorandum between the US and Iran on June 17. Tankers that had been stuck in the Persian Gulf for months began leaving the area with their tracking systems switched on – a sign of normalisation not seen since the start of the war.
US Energy Secretary Chris Wright said that supply volumes through the strait had virtually returned to pre‑war levels, with at least 20 million barrels passing through in the last 24 hours. At the same time, he warned that full recovery would take several weeks due to the need to demine the area.
Market Flooded with Supply: Contango and Physical Barrel Sell‑Off
Buyers are facing an oversupply – traders are offering oil from the Gulf states, Angola and other African regions. The Brent front‑month spread has moved into contango for the first time since the war began – a structure where future futures trade at a premium to near‑term ones, signalling easing concerns about shortages.
Additional downward pressure on prices comes from the US temporary authorisation to purchase Iranian oil already loaded before the restrictions were imposed. Although financial and insurance restrictions remain, this move increases the volumes available on the market.
Analysts: The Drop May Be Excessive
Despite the sharp decline, experts warn that the market has not yet left the danger zone. Global oil inventories were severely depleted during the conflict. At the key hub in Cushing, Oklahoma, stocks fell to 19 million barrels – below the operational minimum needed for smooth operations.
Restoring production at fields, repairing infrastructure and completing demining will take months. ING analysts note that “the price drop is probably excessive”: if flows through the strait do not fully recover, the market could face a new deficit as early as the end of July.
Outlook: 60 Days for Nuclear Settlement
The key factor remains the negotiations on Iran’s nuclear programme, for which 60 days have been allotted. US Secretary of State Marco Rubio visited Gulf countries this week, trying to reassure allies hit by Iranian strikes. Trump has already made it clear that any Iranian attempt to charge fees for passage through the strait would be a “red line” and lead to the collapse of a final agreement.
The restoration of supplies through the Strait of Hormuz and the return of oil prices to pre‑war levels is an important signal for the global economy, which has faced inflationary pressure due to rising energy costs.
However, as analysts warn, the path to full normalisation will be long, and any new escalation in the Middle East could once again shake the market.
