Oil Prices Fall to $80 as Iran Deal Reopens Strait of Hormuz, June 21

Oil prices have plummeted to $80 per barrel from $118 in March after the US and Iran signed a ceasefire deal on June 16. The agreement promises to reopen the Strait of Hormuz, which has been blocked since February. However, the deal faces immediate strain after Iran reclosed the strait on June 20, citing Israeli strikes in Lebanon. UK and European petrol prices are expected to fall in coming weeks if the truce holds.

How the War Sent Oil Prices Soaring

At the start of 2026, oil traded at $60 per barrel. When the Iran war began, prices doubled to $118 by March 31. The blockade of the Strait of Hormuz, through which 20% of global oil passes, created severe supply shortages. Fuel suppliers outside the Middle East proved more flexible than expected, which helped limit further price spikes.

The Deal and Its Immediate Collapse

The US and Iran signed a framework agreement on June 16 that set a 60-day ceasefire period. Trump insisted there would be no tolls for Hormuz passage during the ceasefire. However, on June 20, Iran’s Revolutionary Guard announced it reclosed the strait after Israeli strikes killed about two dozen people in southern Lebanon. The US Central Command reported 55 merchant ships passed through on June 20 before the closure.

When UK Petrol Prices Will Drop

Petrol prices in Australia are now lower than before the Iran war began. However, UK and European consumers face delays. Even when the Strait of Hormuz fully reopens, tankers take about 50 days to reach Europe. Ireland cut petrol excise by 15 cents per litre in late March. Those cuts expire at the end of July unless extended. Up to 5% of European refineries suffered damage during the blockade.

What Happens If the Deal Breaks

Iran’s reclosure of the strait on June 20 signals the ceasefire remains fragile. US Vice President JD Vance departed for Switzerland on June 20 to continue talks with Iranian officials. If negotiations fail and the blockade resumes, oil prices could spike again. Energy bills and food costs have already risen 7% to 11% across Europe due to the four-month crisis.

Final Thoughts

Oil prices fell 32% to $80 per barrel after the US-Iran deal, but Iran’s June 20 strait reclosure shows the ceasefire remains unstable. UK petrol prices will take 50 days to fall even if the deal holds. Investors should monitor ongoing Switzerland talks for signs the deal will survive.

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