Oil Prices Crash as US and Iran Reach Peace Deal

Global oil prices have experienced their steepest quarterly decline since the 2020 pandemic, with Brent crude falling approximately 30% to nearly $70 per barrel by July 3, 2026. This collapse follows a four-month conflict between the United States and Iran that began in February, driving prices to a peak of $126 in April. Market volatility eased after the two nations signed a memorandum of understanding on June 17 and entered a 60-day ceasefire, leading the U.S. to lift port blockades and sanctions on Iranian oil.

Recovery of shipping flows through the Strait of Hormuz has been central to the price drop. While Iran initially restricted transit to northern routes and maintained control through mines and drone strikes, traffic has more than quadrupled in the last week, with current flows exceeding 10 million barrels per day. Saudi Arabia and the United Arab Emirates have both restored exports to near pre-war levels, while Kuwait significantly increased production to 1.65 million barrels per day in June.

Diplomatic efforts remain fragile. U.S. envoys Jared Kushner and Steve Witkoff traveled to Doha, Qatar, for talks, though Iranian officials refused direct meetings, insisting that interim deal terms be finalized first. Despite this, Donald Trump stated that negotiations are progressing well. Financial institutions including Morgan Stanley and Goldman Sachs have slashed forecasts, warning that high U.S. production and weak Chinese demand could create a global oil surplus of up to 4.8 million barrels per day by 2027.