Brent Crude Falls Below $70 as Iran-US Ceasefire Reopens the Strait of Hormuz

Brent crude fell below $70 a barrel on July 1, 2026 — landing almost exactly where it stood before Iran and Israel exchanged fire in late February. That round trip is the direct result of a memorandum of understanding signed by the United States and Iran on June 18, which ended the four-month conflict and reopened the Strait of Hormuz, the chokepoint through which roughly a fifth of the world's oil trade normally passes.

The speed of the price reversal is itself notable. Global oil markets adjusted trade flows and cut demand faster than most forecasters expected, with the bulk of that demand reduction concentrated in Asia — the region most dependent on Middle Eastern crude. Gulf producers also rerouted supply around Hormuz, non-Middle East exporters raised output, and the US and other OECD governments released strategic reserves to cushion the gap.

The conflict began February 28, 2026, and its closure of the Strait of Hormuz — the passage between Gulf oil producers and open water — was the single biggest supply shock to hit oil markets in years. For four months, roughly a fifth of global oil trade had no direct route to market, forcing importers to draw down inventories, bid for alternative barrels, and in some cases idle refining capacity.

The June 18 MOU changed that calculus almost overnight. With the strait reopening and hostilities ending, the risk premium that had been baked into oil prices — the extra dollars per barrel traders demand to compensate for the chance of further disruption — began unwinding immediately. By July 1, Brent had round-tripped back to roughly where it started.

That doesn't mean the market simply resets to where it was in February. The US Energy Information Administration's July Short-Term Energy Outlook expects an initial adjustment period lasting through most of the third quarter of 2026, as inventories, shipping routes, and refinery runs normalize. After that, the EIA projects markets swing back toward oversupply — inventories are forecast to build by an average of 2.7 million barrels a day in the fourth quarter of 2026 and 5.0 million barrels a day in 2027, as supply growth outpaces demand and pushes prices lower still.

The speed of the demand-side adjustment is itself a data point worth remembering the next time a Hormuz disruption scenario is discussed as an unmitigated catastrophe. Asian refiners and buyers demonstrated they could substitute alternative crude grades, redirect tanker routes, and draw down stockpiles fast enough to prevent the kind of sustained price spike many models assumed. That flexibility matters for how policymakers and forecasters should weight future geopolitical risk premia in oil markets.

Not all of the conflict's effects are reversing as cleanly. Damage to liquefied natural gas liquefaction infrastructure in Qatar — one of the world's largest LNG exporters — is expected to reduce projected supply growth for years, not months. The cumulative shortfall in LNG supply between 2026 and 2030 is estimated at around 120 billion cubic meters, a loss with implications for gas-importing economies in Europe and Asia that extends well past the point where oil prices normalized.

For energy importers, the practical takeaway is a split timeline: the acute oil-price shock has largely passed, and the EIA's own forecast points toward renewed oversupply and softer prices into 2027. But the LNG supply damage is a slower-moving, longer-duration cost of the conflict, and one that won't show up as cleanly in a daily Brent quote. Energy security planning that treats 'the crisis is over' as synonymous with 'all energy markets are back to normal' would be missing that distinction.