WTI crude futures plunged 5.18% to $80.48/bbl on June 15 after the US and Iran confirmed a peace agreement that will reopen the Strait of Hormuz. The deal, to be signed in Switzerland on June 19, includes lifting of blockades, sanctions relief for Iran, and dismantlement of Tehran's nuclear program.
The market had been pricing in a sustained war premium. WTI had touched above $100/bbl in recent weeks as the Iran conflict disrupted an estimated 10.5 million barrels per day of Gulf production. The reopening of the Strait of Hormuz removes approximately 20% of global oil transit risk at a single chokepoint.
The EIA's June STEO projects WTI to average around $80/bbl for the remainder of 2026, assuming the peace deal holds. However, the Middle East situation remains fragile and the agency's forecasts are subject to significant uncertainty. US commercial crude inventories have been drawing sharply due to the disruption.
Brent crude fell 4.8% to $83.14/bbl. The Brent-WTI spread widened as European refineries continue to face higher costs for alternative supply sources even after the deal. RBOB gasoline futures also fell sharply, with the EIA projecting US gasoline to average $3.70/gal in 2026, up from $3.10/gal in 2025.
The Iran deal is a significant bearish catalyst for oil prices. However, the market may have front-run the settlement, and execution risk remains until the June 19 signing. Consider hedging Q3-Q4 2026 consumption with WTI swaps or options, anchoring around $75-80/bbl as the new equilibrium range.