WTI crude fell sharply on June 10, declining 3.4% to $88.20/bbl as diplomatic progress in the Middle East raised the prospect of a reopening of the Strait of Hormuz. Iran and Israel announced a halt to cross-border attacks following an appeal from US President Donald Trump, marking the most significant de-escalation since the conflict escalated in early 2025.
The Strait of Hormuz, through which approximately 15 million barrels per day (15% of global supply) transits, has been effectively closed since March 2025 due to mine-laying and naval engagements between Iranian and coalition forces. Mine clearance operations could take 2-4 months to restore full transit capacity, analysts at the International Energy Agency estimate.
OPEC crude output fell to 26.3 million b/d in March 2026, the lowest since June 2020, as compliance with production cuts reached 107%. Saudi Arabia is preparing to lower its July official selling prices for most crude grades shipped to Asia, a signal that spare capacity is available to fill any gap once Hormuz reopens.
The selloff was amplified by algorithmic selling as WTI broke below $90/bbl, a key psychological level. Trading volumes on NYMEX exceeded 1.2 million contracts, 40% above the 30-day average. Despite the decline, WTI remains elevated by historical standards, with the 2026 average at $92/bbl.
The Hormuz reopening timeline is uncertain, but the trajectory is toward normalization. Use the current pullback to fix Q3 fuel and feedstock hedges at $85-90/bbl. Maintain flexibility for Q4: if Hormuz reopens fully, prices could test $75; a breakdown in talks sends them back toward $100.