Oil Prices Fall 5% After US-Iran Peace Deal, June 16

The US and Iran agreed to a framework peace deal on June 15, sending oil prices tumbling and global stock markets surging. Brent crude fell more than 5% to $82.84 per barrel (£61.70), down from $120 during the conflict. The deal includes reopening the Strait of Hormuz, through which 20% of the world’s oil and liquefied natural gas normally flows. However, analysts warn the Strait will take weeks to fully reopen and fuel prices will not normalize for months.

Oil Plunges on Peace Deal Announcement

Brent crude fell more than 5% to $82.84 per barrel following the US-Iran framework agreement announced on June 15. The price had peaked at $120 during the 100-day conflict that closed the Strait of Hormuz. Before the war began on February 28, oil traded around $70 per barrel. Oil prices fell and shares jumped as investors welcomed the deal. Vandana Hari from Vanda Insights warned that a lack of detail on the agreement could inject unease and volatility into markets over the coming week.

Global Stock Markets Rally on Relief

Stock markets surged across Asia and Europe on the peace deal news. Japan’s Nikkei 225 closed 5% higher, while South Korea’s Kospi gained 5.2%. Germany’s Dax rose 1.2% and France’s Cac 40 added 0.7%. The FTSE 100 in London slipped 0.4% because energy giants BP and Shell fell on lower oil prices. Analysts said the deal gave investors a reason to dial back geopolitical risk premium that had hung over markets for months.

US Fuel Prices Remain High Despite Oil Drop

US petrol prices averaged $4.06 per gallon on June 16, down from a peak of $4.48 in early May but still well above the $2.98 per gallon on February 28 when the war began. US fuel prices will take months to normalize even after the Strait reopens. Energy prices in the US have risen 7.7% over the past two months and 40% over the past year, according to the Labor Department. Experts say every $10 increase in oil price pushes pump prices up by roughly 7 pence per litre.

Strait Reopening Will Take Weeks, Not Days

President Trump claimed ships were already moving through the Strait of Hormuz, but ship-tracking data shows only two vessels have exited since Sunday. The Strait has been closed to most shipping since February 28, with hundreds of tankers stuck in the gulf due to sea mines and drone strike risks. A return to pre-war shipping levels will take weeks or months as mine removal and repositioning of tankers takes time. Analysts warn that even with safe passage, the backlog of oil and tankers in the wrong locations means supply normalization will be gradual.

Final Thoughts

Oil fell 5% to $82.84 per barrel after the US-Iran peace deal, but investors should expect a slow recovery. Fuel prices will remain elevated for months despite the Strait of Hormuz reopening, as mine removal and tanker repositioning take time.

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