Pomegra
WTI crude dips below $70 for the first time since March as resuming tanker traffic through the Strait of Hormuz erases the price premium built during months of wartime supply disruption.
- WTI August futures fell to $69.40/bbl on June 25, the lowest since early March 2026, as Hormuz shipping resumes.
- More than 20 tankers carrying roughly 35 million barrels of crude have now transited the strait since the US-Iran deal was signed.
- Citi forecasts Brent crude falling to the $60–$65/bbl range over the next six to twelve months as Gulf flows normalize.
Lead
West Texas Intermediate crude for August delivery settled near $69.40 a barrel on Wednesday, June 25, marking the contract's lowest close in approximately four months and erasing virtually all of the wartime premium accumulated since US and Israeli forces began operations against Iran on February 28. Brent crude fell in parallel, shedding 1.67% to roughly $72.51 a barrel, as maritime-tracking data confirmed that tankers stranded in the Persian Gulf for more than three months had begun transiting the Strait of Hormuz in meaningful numbers for the first time since the conflict began.What Happened
The immediate catalyst was a visible acceleration in vessel movement through the strait. According to commodity data firm Kpler, at least 20 tankers crossed the Hormuz chokepoint in a single session late last week — the highest single-day count since June 2 — with total transits since the ceasefire memorandum numbering more than 20 vessels carrying an estimated 35 million barrels of crude. Three large Saudi Arabia oil tankers were among the first to depart the Gulf after Tehran confirmed it would permit commercial passage.
WTI had briefly fallen below $70 per barrel on June 24, the first breach of that level since March 2, before settling marginally above it. The move extended a losing streak that has now run four consecutive sessions, with front-month futures having shed more than 4% in a single day earlier this month when the initial peace framework was announced.The Diplomatic Backdrop
On June 17, US President Donald Trump and Iranian President Masoud Pezeshkian signed the Islamabad Memorandum, a preliminary ceasefire agreement brokered during side-talks at the G7 summit. The accord establishes a 60-day period for further negotiations — including on Iran's nuclear program — and commits both sides to lifting their respective maritime blockades. A follow-on session in Switzerland concluded June 21 with both parties endorsing what mediators described as "a road map" to a final deal.
Critically for energy markets, the memorandum allows Tehran to resume selling oil freely on international markets immediately, removing a layer of uncertainty that had kept a geopolitical risk premium embedded in crude since late February.
Market Reaction
The price response has been swift and largely symmetrical to the initial wartime spike. WTI is now trading at levels that predate the conflict, effectively unwinding four months of supply-disruption premium. Brent crude has tracked closely, hovering near pre-war levels not seen since before the Strait closure began.
OPEC+ has compounded the bearish signal. Seven major producers, including Saudi Arabia and Russia, agreed in early May to add a collective 188,000 barrels per day to June output quotas — a modest but directionally significant shift that markets interpreted as confidence in returning supply stability. Saudi Arabia's quota was raised to 10.291 million bpd, though actual production had fallen as low as 7.76 million bpd in March amid the regional chaos.Supply Picture and the Hormuz Chokepoint
Before the February 28 outbreak of hostilities, the Strait of Hormuz accommodated roughly 25% of global seaborne oil trade and 20% of worldwide liquefied natural gas shipments — approximately 20 million barrels of crude equivalents per day at peak throughput. The Iran Revolutionary Guard Corps (IRGC) effectively sealed the passage within days of the conflict's start, cutting OPEC's total production by an estimated 7.88 million bpd in March alone — a 27% monthly decline to 20.79 million bpd.
Traffic data illustrates how dramatic the disruption was: only 191 vessels of all types crossed the strait during the entire month of April, against a prewar daily average exceeding 100 ships, including dozens of laden tankers. The vessels now moving through the corridor represent non-Iranian ships that had been anchored in the Gulf since March, waiting for a diplomatic resolution. Most are expected to reach Asian discharge ports by early August.
One significant caveat remains. On June 25, the IRGC issued a warning that commercial passage would only be permitted along routes specifically designated by Tehran, underscoring that the strait, while functionally open, has not reverted to unrestricted freedom of navigation.
Geopolitical Dimension
The broader strategic context frames the Hormuz reopening as consequential beyond the short-term oil price move. The strait has long been described as the world's most important energy chokepoint, and its effective closure for nearly four months constituted the most severe disruption to global crude flows since the 1973 Arab oil embargo. The episode has renewed interest among Gulf producers and major consuming nations in alternative pipeline infrastructure — most notably the Saudi East-West pipeline to Yanbu and Abu Dhabi's Habshan-Fujairah line — that bypasses the strait entirely.
For Iran, immediate resumption of oil exports is among the most tangible economic dividends of the memorandum. Iranian crude production, nearly entirely blocked from reaching international buyers during the blockade, can now flow to Asian customers — primarily China — as US sanctions are expected to ease progressively under the 60-day framework.
Outlook
With tankers actively transiting and diplomatic momentum intact, the supply premium that propped WTI above $80 for much of the war period has all but dissolved. Citi projects Brent crude settling into a $60–$65 range over a six-to-twelve-month horizon as Strait of Hormuz flows normalize and Gulf producers rebuild export capacity. The 60-day negotiating window introduces residual uncertainty — talks could stall, and the IRGC's corridor restrictions leave room for renewed friction — but the directional pressure on prices remains to the downside as long as vessels continue to transit without incident.
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