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Crude prices sink below $80 per barrel after the U.S. and Iran agree to end the war and reopen the Strait of Hormuz.
After nearly four months of conflict that rattled energy markets and disrupted 20% of the world’s oil supply, the United States and Iran announced a deal on Sunday night to end their war and reopen the Strait of Hormuz.
Trump posted on Truth Social:
Pakistani Prime Minister Shehbaz Sharif, who served as a key mediator throughout negotiations, announced it minutes earlier and confirmed that a formal signing is set for June 19 in Geneva, Switzerland.
Following intensive talks, we are pleased to announce that the Peace Deal between the United States of America and Islamic Republic of Iran has been REACHED. Both sides have declared the immediate and permanent termination of military operations on all fronts, including in…
— Shehbaz Sharif (@CMShehbaz) June 14, 2026
To understand why this matters so much, you have to go back to February 28, 2026, when the U.S. and Israel launched a series of strikes against Iran, with the stated aim of targeting Iran’s nuclear and ballistic missile program and inducing regime change.
Iran’s Supreme Leader Ali Khamenei was killed in those strikes, and Tehran responded by appointing his son as successor and closing the Strait of Hormuz. That closure is what set off a chain of economic damage the world is still recovering from.
The blockage of the Strait caused a daily shortfall of about 14 million barrels of oil, according to the International Energy Agency, driving up energy prices worldwide and spurring fuel shortages in many countries. At its peak, Brent crude surged to a 4-year high of nearly $120 a barrel, up roughly 70% since the outbreak of the conflict on February 28.
The U.S. hit back by imposing a naval blockade on Iranian ports, and from there the two sides spent months trading threats, setting and missing diplomatic deadlines, and holding indirect negotiations through Pakistan and other intermediaries.
A temporary ceasefire was reached in April 2026, offering a brief reprieve, but it barely held. In May 2026, a memorandum extended the truce for 60 days while both sides attempted to address the nuclear concerns, sanctions relief, and the mechanics of actually reopening the waterway.
Markets reacted instantly once the announcement dropped. The price of U.S. crude oil fell more than 4.5% to $80 per barrel, its lowest level since the first week of March, as trading opened Sunday evening. And by Monday, prices were down nearly 13% from their levels mid-last week.
What’s actually in the deal, though, requires careful reading, since the full text hasn’t been publicly released. What’s been confirmed publicly by both sides is narrow.
Iran’s Deputy Foreign Minister Kazem Gharibabadi said the text has been finalized and will be signed on Friday in Geneva. He added: “A permanent and immediate end to the war has been declared on all fronts.” Iran’s Supreme National Security Council also confirmed it, describing the deal as the result of “a difficult and intensive period of negotiations lasting several months.”
On the Hormuz question specifically, the reopening is not instantaneous. The U.S. says Iran has laid mines in the Strait. Trump said on Sunday that the Strait will be opened for mine removal after the deal is signed on Friday. Iran’s state news agency Mehr added that the reopening would be subject to “Iranian arrangements,” which hints that Tehran is not simply ceding control of the waterway.
Economically, Iran reportedly stands to receive the suspension of sanctions on Iranian oil sales and the release of $24 billion in frozen Iranian assets. Iranian Deputy Foreign Minister Gharibabadi called this a victory for Iran, which suggests the pressure Tehran was under.
The emerging deal has been criticized by Israel’s government and by critics in Trump’s own Republican Party, some of whom said it did not improve on the terms of the 2015 Iran nuclear deal that Trump himself withdrew the U.S. from during his first term.
Internationally, French President Emmanuel Macron, who is hosting Trump and other G7 leaders in Evian today, said the summit would discuss “the lasting reopening of Hormuz and of course the concluding of an accord on nuclear and ballistic activities in Iran.” The UN Secretary-General called it a “critical step.
What this deal actually is, to be precise, is an interim memorandum of understanding, not a final peace settlement. The hard things, including Iran’s nuclear enrichment capacity, the sanctions architecture, and what happens to Hezbollah, are all still on the table. What’s been agreed is a ceasefire, a withdrawal of the blockade, a reopening of the waterway, and 60 days to try to sort out the rest. Still, it is a significant de-escalation from a war that was pushing oil prices toward $120 and creating global fuel crises.
