Global crude oil prices have tumbled more than 10% since mid-May, hitting three-month lows, after the United States and Iran reached a preliminary peace agreement that raises hopes for the eventual reopening of the Strait of Hormuz — the world most critical oil transit chokepoint that has been partially closed for months.
The Deal and What It Means
President Trump said he called off an imminent wave of military strikes against Iran on May 18 to allow more time for negotiations. Secretary of State Marco Rubio confirmed that talks have made progress, and Trump stated that the Strait of Hormuz would reopen after the peace deal was signed. Iranian authorities have indicated a 60-day negotiating period for a final agreement tackling wider regional issues.
Brent crude futures, which had spiked above $120 per barrel at the height of the crisis, have settled around $94. The Guardian reported on June 15 that "markets reached record high amid Iran deal breakthrough."
Sentiment vs Supply Reality
However, energy analysts caution that sentiment is not the same as supply. Rystad Energy chief economist Claudio Galimberti noted that significant work remains: "The Strait of Hormuz needs to be de-mined, ships need to be able to freely flow, Middle East production needs to come back online, emergency petroleum reserves need to be refilled, and damaged energy facilities need to be repaired."
The EIA June 2026 Short-Term Energy Outlook forecasts Brent crude at an average of $105 per barrel for June-July under the assumption that the Strait remains closed to most shipping in the near term. Once flows resume, prices could fall to $79 per barrel in 2027.
India Relief at the Pump
For India — which imports over 85% of its crude oil and saw petrol and diesel prices surge during the crisis — the price decline offers significant relief. India fuel import bill, which swelled by an estimated $25 billion during the peak of the Hormuz crisis, could begin to ease. The RBI, which has been watching imported inflation closely, may find room to maintain its accommodative stance if oil prices continue their downward trend.
Indian Oil Corporation, BPCL, and HPCL — the three state-owned oil marketing companies — are expected to benefit from lower crude procurement costs in the coming quarters if the peace deal holds.
Sources: CNN Business, The Guardian, CNBC, EIA STEO, Reuters
