Brent crude nears $78 as Hormuz reopens after US-Iran deal

What changed in the oil market

Oil prices extended their decline after the United States and Iran signed an interim agreement aimed at ending the conflict and restoring commercial shipping through the Strait of Hormuz. The move triggered the first significant movement of oil and gas tankers through the waterway in months, including Saudi-flagged vessels carrying millions of barrels. Traders and analysts said the initial return of tanker traffic is easing immediate supply fears, but the market is waiting for consistent volumes before calling the disruption fully over. The Strait had seen more than 100 days of disruption, and the restart is now reshaping price expectations across crude and refined products.

Brent and WTI: where prices traded

Brent crude fell 0.68% to $18.31 a barrel, while WTI slipped 0.60% to $16.14 a barrel after tankers began moving following the interim peace deal. In another point captured during the sell-off, Brent crude futures fell $1.53, or 1.9%, to $18.02 per barrel. Around 7 am IST on Thursday, WTI was quoted at $16.10, down $1.69 or 0.90%, while Brent stood at $18.86, down $1.69 or 0.87%. Since the announcement of the peace deal, both benchmark crude prices have fallen by over 5% and hit three-month lows amid expectations that oil flows could restart.

What the interim agreement says

The two sides signed a 14-point memorandum that starts a 60-day negotiation period. During this period, Iran will permit toll-free passage through the Strait of Hormuz, a vital route for global oil and gas. The memorandum also sets out plans for traffic through the strait to be restored to full capacity within 30 days. At the same time, the preliminary accord leaves several big issues unresolved, including Iran’s nuclear programme.

How much oil could return to global supply

The deal is expected to release over 85 million barrels of oil into global markets, according to the information provided. Middle East producers, including Kuwait, have lifted force majeure notices, and sanctions on Iranian oil were cited as being waived in the context of boosting supply. Separately, over 60 million barrels of crude were described as set to leave the pipeline as the Strait returns to operations. Industry executives also pointed to stranded tankers in the Persian Gulf resuming deliveries, and substantial volumes of crude believed to be held in onshore storage that could be shipped as routes normalize.

Asia’s timing problem: cargoes returning fast

Traders said the crude cargoes could reach India in about a week and East Asia in roughly three weeks. But the return of those barrels is arriving after many Asian refiners rushed to secure alternative supplies during the conflict. As a result, refiners in the region were described as already well supplied for both this month and next, raising the risk that a sudden wave of arrivals could turn shortage concerns into oversupply worries. That potential swing is one reason the market reaction has been more about price pressure than relief.

Market structure flips: contango and product discounts

Oil market pricing has started reflecting expectations of increased supply. The forward curve for Middle Eastern benchmarks such as Dubai and Murban has shifted into a bearish contango structure for the first time since the conflict began, signalling a market that expects more supply later. Oman crude also traded at a discount to its Dubai benchmark this week, reversing its typical premium. In products, at least one diesel cargo changed hands at a discount to its benchmark after earlier trades at premiums. Traders also said at least one South Korean refiner was offering a larger-than-normal volume of distillates, including diesel and jet fuel, as sellers tried to place barrels before a fuller reopening adds more pressure.

Key facts at a glance

Shipping and insurance: why caution remains

Even as tanker traffic resumes, shipping and insurance industries were described as waiting for greater security guarantees before declaring the crisis over. Analysts also noted that while trade is resuming, markets remain cautious until consistent tanker traffic is confirmed. That uncertainty matters because any stop-start pattern would keep freight, insurance costs, and physical differentials volatile even if paper prices fall.

What it means for India: imports, freight, and pump prices

For India, which imports roughly 85% of its crude oil needs, a sustained fall in global prices directly lowers the import bill and takes pressure off the rupee. Refinery executives said the Gulf’s geographical proximity could mean faster and more reliable crude shipments, potentially reducing reliance on longer-distance cargoes from the United States and Russia while Hormuz flows normalize. The reopening is also expected to lower freight and insurance costs as hostilities ease and tanker availability improves. But one note of caution in the reporting was that consumers may not see immediate relief at the petrol pump, as supply chains and inventories adjust after the disruption.

Market impact and why it matters

The reopening of Hormuz is generally bearish for oil prices because it reduces fears of supply disruptions and brings back barrels that were delayed or shut in. The direction of prices was described as depending on whether shipping volumes continue to rise over the coming weeks, and whether Gulf producers restore curtailed output. In its monthly market report, the agency cited projected that global supply could exceed demand by 5.05 million barrels per day next year as Middle Eastern oil returns to the market. The same set of dynamics also creates a risk of an oversupplied market, particularly if Asian refiners remain long on crude and products after buying replacements during the conflict.

Conclusion

Oil prices fell as the US-Iran interim agreement reopened the Strait of Hormuz and triggered the first meaningful tanker movements in months. The market is now focused on whether traffic returns close to pre-conflict levels and whether the planned ramp-up to full capacity within 30 days holds, as those milestones will shape how quickly supply normalises and how far prices adjust.