Oil Price Drops to Pre-Iran Conflict Levels
Oil price falls back to pre Iran – Global oil prices have eased to levels last recorded before the recent escalation in the Iran conflict, as maritime traffic through the vital Strait of Hormuz begins to normalize. The benchmark Brent crude oil price dipped below $72.48 (£55) per barrel, matching the level observed the day prior to the U.S. and Israel’s strikes on Iran on 28 February. Though it briefly stabilized at $73.23, the return to pre-war pricing marks a significant shift in the energy market. This development follows weeks of volatility triggered by Iran’s closure of the strait, which disrupted global oil and gas supply chains.
Strait of Hormuz and Market Turbulence
The closure of the Strait of Hormuz, a key artery for global energy trade, initially sent shockwaves through the oil market. Iran’s blockade of the waterway, which passes through its territory, led to a sharp decline in crude oil shipments and heightened fears of supply shortages. The disruption forced energy markets into a state of uncertainty, with prices fluctuating wildly as tensions lingered. Now, with the U.S. and Iran signing a Memorandum of Understanding (MOU) on 17 June, a 60-day framework for resolving the conflict, the situation has begun to stabilize.
The MOU outlines steps to address the ongoing war, including negotiations on Iran’s nuclear program and other measures to de-escalate the crisis. Since its announcement, maritime activity through the strait has gradually increased, though it remains below pre-conflict averages. According to Kpler, a maritime intelligence firm, 284 vessels transited the strait from 18 June, the day after the agreement was signed. However, this number is still far lower than the typical 138 crossings per day, indicating that recovery is underway but not yet complete.
Risks and Reassurance
Despite the decline in oil prices, experts caution that the region remains a focal point for market volatility. Pratibha Thaker, regional director for the Middle East and Africa at the Economist Intelligence Unit, noted that “oil prices have fallen back to pre-conflict levels, but risks persist.” She emphasized that any renewed hostilities could swiftly reverse the trend, pushing prices upward again. The cautious optimism is underscored by the fact that Iran and the U.S. have established a communication line to prevent misunderstandings, as stated by Qatar and Pakistan in a joint declaration on Monday.
While the number of ships using the strait has improved, the situation is not fully
