The agreement between the US and Iran regarding the reopening of the Strait of Hormuz, expected to be signed on June 19, 2026, will not only reshape the oil market but also influence global energy geopolitics for years to come. On June 15, Donald Trump announced the readiness of a 14-point memorandum, and the market reacted immediately: Brent crude fell to around $80 per barrel, resulting in a historic decline in the share prices of Russian companies, hitting 2022-23 lows. This is not just another price fluctuation; it represents a turning point after which the logic of global energy trade will fundamentally change.
However, it may be premature to rush into optimism. Participants in this standoff have reached agreements before, so, as they say, we'll see. As of now, approximately 500 vessels remain "anchored" in the Hormuz Strait, and it is unclear when or how trade will resume. The fate of freight rates also hangs in the balance, with a potential crash looming.
Regarding the deal itself, the parameters appear to be relatively clear. Iran will demine the strait within 30 days and guarantees unrestricted passage of vessels without tariffs and delays. The US will gradually lift the maritime blockade. A ceasefire will be extended for 60 days across all fronts, including Lebanon. Concurrently, two months of negotiations on Iran's nuclear program will commence, focusing first on the disposal of highly enriched uranium. The US has committed to discussing the easing of sanctions and unblocking approximately $24 billion in frozen Iranian assets, according to Axios.
The unfreezing of these assets has been the main sticking point in previous negotiations. Other anticipated points of the memorandum include respect for sovereignty, payments (up to $300 billion) to Iran for post-conflict recovery, a concession from Iran regarding its nuclear ambitions, and the subsequent signing of a final peace agreement.
The market's reaction to the latest "Trump deal" was predictable in form, but not in magnitude.
While in March 2026 prices quickly surpassed $100 per barrel due to favorable news, the same mechanism is now working in reverse. Prices are not just falling; they are beginning to revert to levels that suggest a full restoration of shipping. According to forecasts from the US Department of Energy as of June 9, Brent is expected to drop to $79 per barrel by 2027. Given the current market momentum, this level could be approached sooner than the baseline scenario predicted.
However, the baseline scenario and the real-world scenario are two different matters. The International Energy Agency warned in its May report that even with a signed ceasefire, supply shortages will be felt until October 2026. The recovery process for shipping involves several stages. Initially, demilitarization will take the stated 30 days. Then, insurers will need time to restore coverage for tankers passing through the Persian Gulf. Following this, production volumes will be gradually ramped up from previously shelved operations. These steps will not occur simultaneously, and the entire recovery process will take several months. This suggests that prices below $90 will not be an imminent issue, but rather a concern for the second half of 2027.
The reopening of the strait creates clear winners and losers, and this distribution does not align with traditional geopolitical expectations. Global oil consumers, particularly China and India, will benefit from a restoration of supplies from the Persian Gulf and a notable decrease in energy prices. Iran itself will regain the ability to export, which is essential for the survival of its economy. Unfreezing assets and gradually easing sanctions will provide Tehran with resources to rebuild its damaged oil and gas infrastructure.
Paradoxically, the United Arab Emirates will also emerge as a winner. The UAE left OPEC+ on May 1 specifically to exercise the freedom to increase production without the cartel’s consent. ADNOC, the national oil company of the UAE, plans to increase its production capacity to 5 million barrels per day by 2027, which equates to an increase of 1.5–1.6 million barrels per day. If Hormuz reopens and shipping insurance is restored, the Emirates will finally be able to export these volumes to the global market rather than keeping them as mere intentions.
The losers will be oil producers outside of the Persian Gulf. The reopening of the strait signifies a return to the market of previously deferred supply. Between February and May 2026, Saudi Arabia, Iraq, Kuwait, and the UAE cut their production by over 11 million barrels per day. These volumes will start re-entering the market. Simultaneously, there is potential for the easing or complete lifting of the oil embargo on Iran as part of the deal with the US. This will create a supply race in the Middle East, where each producer will strive to enhance sales while prices are still relatively high.
Russian exports are in a vulnerable position. With Brent prices at $95–107, exports operate in a comfortable price zone, providing substantial additional budget revenues over the baseline price of $60 set in the budget rule. A decline to $79–80 will completely negate these advantages.
It is still too early to talk about a full revival of oil, petroleum products, and other cargo transport through the Strait of Hormuz: we must wait until June 19, when the memorandum between the US and Iran is expected to be signed. If transit resumes post-signing, Brent oil prices could drop to below $70 per barrel in relatively short order, according to Sergey Teryoshkin, General Director of Open Oil Market.
“Along with Brent prices, Urals prices will also decline: if in May 2026 the tax price of Russian oil, reflecting spot quotes for Urals and Brent, was $86 per barrel, in the summer it could drop below $60 per barrel.”
For the rest, not much will change for Russian oil producers: oil production in Russia in May 2026 was only 300,000 barrels per day lower than in February, while Saudi Arabia, Iraq, and Kuwait (the three other largest participants in the OPEC+ deal) reduced their production by more than 9 million barrels per day in total.
Overall, the oil market will begin to return to normal in the second half of 2026.
This will manifest, among other things, in intensified competition among producers, given the likely increase in production in the Middle East and potential easing of sanctions against Iran,” explains the expert.
OPEC+ agreed earlier in June to raise production quotas by 188,000 barrels per day for July. This is not an expansion — it is preparation for retreat. However, Russia's options in this regard are limited. In May 2026, Russia's oil production was only 300,000 barrels per day lower than in February, while Saudi Arabia, Iraq, and Kuwait combined reduced their production by over 9 million barrels per day. This indicates that Russia is nearing its production ceiling, whereas the Saudis have considerable capacity to increase supplies.
Israel has taken a clear stance against the agreement. According to reports from The Guardian and Israeli media, officials in Tel Aviv believe the memorandum does not constrain Iran's missile program and effectively cements Iran's gains. Former Netanyahu national security advisor Yaakov Nagel described the agreement as a "major mistake." This creates a real risk that Israel might attempt to undermine the implementation of the deal through a new incident in the region.
Republican critics of Trump also oppose the agreement, albeit for different reasons. With the midterms approaching, a faction of the Republican party views the memorandum as a concession to Iran, adding domestic political uncertainty to its implementation. Any major political event in the US could reshape the dynamics surrounding the deal.
In practice, the implementation could follow three main scenarios.
The first, baseline scenario: signing on June 19, demilitarization completed by mid-July, insurance restored by August. Brent moves towards $85–90 by the end of Q3 and settles at $79–82 by 2027. This is the scenario laid out in forecasts by the US Department of Energy.
The second, more probable scenario considering historical experiences with such agreements: implementation stalls. Signing occurs, but demilitarization takes longer than the stated 30 days, insurance returns with delays, and Israeli provocations or internal Iranian disagreements hinder progress. Prices revert to $90–95 and remain there until the end of the year.
The third, worst-case scenario: disruption. The deal is not signed on June 19 or is signed but quickly collapses due to a new incident. Prices rebound above $100, and the market returns to a state of crisis regarding Hormuz.
The primary factor of uncertainty in the oil market in the second half of the year will be the behavior of the UAE outside of OPEC+.
The Emirates can increase production in any manner and at any pace without coordinating their actions with the rest of the cartel. In this regard, they become the main source of price unpredictability. Russia can manage its production within OPEC+, but cannot control decisions made by Tehran or Abu Dhabi. This is why June 19 is not just a date; it is a turning point for recalculating all assumptions regarding the energy budget for 2026–2027.
Source: Vgudok
