Key facts
- A U.S.-Iran peace deal is expected to reopen the Strait of Hormuz, a critical energy shipping lane.
- The conflict led to the loss of at least 1 billion barrels of crude oil and refined products.
- Up to 20% of global LNG supply was trapped in the waterway.
- Strategic and commercial inventory releases, along with reduced Chinese imports, helped keep Brent crude below $100/barrel.
- The deal is expected to lead to a short-term drop in energy prices as trapped cargoes are delivered.
- Longer-term, prices may remain elevated as inventories are rebuilt and production ramps up.
A U.S.-Iran peace deal is expected to reopen the Strait of Hormuz, a critical energy shipping lane, potentially lowering crude oil and LNG prices. The disruption caused by the conflict led to the loss of at least 1 billion barrels of crude oil and refined products, and trapped up to 20% of global LNG supply.
Benchmark Brent crude futures remained under $100 a barrel for much of the crisis, aided by inventory releases and reduced Chinese imports. The announcement of a framework agreement by the U.S. and Iran on Sunday, followed by President Trump's statement that tankers were moving out of the Strait, led to a 4% drop in Brent crude to $83.
While a short-term relief is anticipated as trapped cargoes are delivered, prices may stay higher for longer as inventories are rebuilt and Middle East producers ramp up output. The long-term impact hinges on consumer and government behavior, with potential shifts towards electric vehicles and renewables, while coal might see increased favor due to cost and supply security.