Oil Prices Fall to Pre-War Levels as US-Iran Ceasefire Takes Effect

International oil prices have fallen to levels not seen since before the Iran war, driven primarily by the US-Iran ceasefire agreement and the gradual resumption of shipping through the Strait of Hormuz. Brent crude briefly dipped below $72.48 per barrel on June 24, matching the price from February 27, just before US and Israeli attacks on Iran escalated on February 28. New York crude similarly fell to around $69.84 per barrel, representing declines exceeding 4% as supply risks diminished significantly.

The ceasefire agreement, reached on June 15 and formally signed on June 17 at Versailles Palace with US President Donald Trump and Iranian President Pezeshkian both endorsing the memorandum of understanding, established a 60-day negotiation period to achieve a final accord. The agreement includes commitments to halt all military operations across all fronts, including Lebanon, and sets terms for sanctions relief and reconstruction assistance. Crucially, the accord provides for the US to begin lifting its maritime blockade immediately and fully end it within 30 days, while Iran commits to facilitating safe passage for commercial vessels through the Strait of Hormuz for 60 days at no cost.

Shipping data reflects substantial improvement in regional transit. According to Kpler, daily petroleum transportation through the Strait of Hormuz has risen to approximately 4.8 million barrels following the memorandum signing, with numerous large tankers passing through since negotiations began. Maritime risk firms report around 80 vessels crossing the strait since the first round of peace talks in Switzerland on June 21-22, though this remains well below pre-war levels of over 100 ships daily. The UK Maritime Trade Operations Office downgraded the strait's risk level to "moderate," though residual dangers from mines persist. The US and Iran established a communication line to prevent misunderstandings and ensure safe commercial passage, while Oman is coordinating with the International Maritime Organization to establish temporary shipping corridors.

Sanctions relief has amplified the price decline. On June 22, the US Treasury Department's Office of Foreign Assets Control issued General License X, temporarily exempting Iranian crude oil, petrochemicals, and petroleum products from sanctions through August 21, 2026. This authorization covers production, supply, sales, delivery, and related services including banking, insurance, and transportation. The license represents a significant step toward normalizing Iran's oil exports, which had been substantially restricted under previous administration policies.

Market analysts attribute the sharp decline to multiple factors working in concert. As supply risks ease and the previously blocked waterway reopens, traders have rapidly priced in expectations of increased Iranian oil supply. However, current transportation levels through the strait remain significantly below pre-conflict capacity of approximately 20 million barrels daily. Market consensus suggests daily volumes of around 14 million barrels would restore pre-war supply levels, given that Saudi Arabia and the UAE have redirected some exports through pipelines to bypass the strait.

The oil market volatility reflects the broader impact of geopolitical events on global energy. While crude prices have recovered from war-driven peaks, gasoline prices at US pumps have declined more slowly, with regular gas averaging around $3.93 per gallon after reaching $4 per gallon in April. President Trump has ordered investigations into major energy companies, accusing Shell, ExxonMobil, and others of "price gouging" by not reducing fuel costs proportionally to crude oil declines. The American Petroleum Institute responded that fuel prices do not move in direct lockstep with crude oil costs, citing structural market differences.