Oil Prices Plummet as US and Iran Reach Peace Deal

Global oil prices collapsed in late June and early July 2026, with Brent crude falling from an April peak of $126 to approximately $71 per barrel. This decline followed a 60-day ceasefire and a June 17 memorandum of understanding between Donald Trump and the Iranian government to end a conflict that began in February. The deal facilitated the reopening of the Strait of Hormuz, where shipping traffic more than quadrupled in a single week, restoring Persian Gulf exports to roughly 75% of pre-war levels.

Despite the diplomatic breakthrough, the peace process remained fragile. In late June, a projectile struck the Singapore-flagged container ship Ever Lovely off the coast of Oman. The U.S. attributed the attack to Iran, which in turn warned that vessels deviating from approved routes would not be guaranteed safe passage. These tensions led to brief price spikes and the temporary suspension of an International Maritime Organization evacuation program.

By early July, indirect negotiations in Doha, Qatar, showed positive progress, including the release of some frozen Iranian assets and discussions on denuclearization. While Iran's Foreign Ministry initially denied high-level meetings, technical security talks continued. Meanwhile, Saudi Arabia and the United Arab Emirates ramped up exports, with Saudi Aramco resuming loadings at the Ras Tanura terminal. Financial institutions including Morgan Stanley and Goldman Sachs now warn of a global oil oversupply, projecting a potential surplus of 4.8 million barrels per day by 2027 due to high U.S. production and weak Chinese demand.