The upcoming agreement between the United States and Iran regarding the opening of the Strait of Hormuz, expected to be signed on June 19, 2026, is set to reshape not only the oil market but also the entire energy geopolitics for the coming years. Donald Trump announced on June 15 his readiness for a 14-point memorandum, and the market reacted immediately: Brent crude prices momentarily fell to around $80 per barrel, triggering a record decline in the stocks of Russian companies, reaching lows not seen since 2022-2023. This is not just another fluctuation in prices but a turning point after which the logic of global energy trade is likely to operate differently.
Nevertheless, it may be premature to rush into optimism. This is not the first time participants in this standoff have reached an agreement, so, as the saying goes, we shall see. Currently, there are about 500 vessels “anchored” in the Strait of Hormuz, and it remains unclear who will go where and when. Similarly, the state of freight is at risk of crashing.
As for the deal itself, its parameters seem relatively clear. Iran will demine the strait within 30 days and guarantees unrestricted passage of vessels without tariffs and delays. The United States will gradually lift the maritime blockade. A ceasefire is extended for 60 days across all fronts, including Lebanon. At the same time, two months of negotiations on the Iranian nuclear program will commence, with the initial question being the disposal of highly enriched uranium. The U.S. commits to discussing the easing of sanctions and the unblocking of frozen Iranian assets, which, according to Axios, amounts to around $24 billion.
Indeed, the unfreezing of assets has been the main sticking point in all previous negotiations. Other envisaged points in the memorandum include respect for sovereignty, payments (up to $300 billion) to Iran for post-conflict recovery, and the Iranian renunciation of nuclear ambitions, culminating in the signing of a final peace agreement.
The market's reaction to yet another "Trump deal" was predictable in form but not in scale.
If in March 2026 prices quickly surpassed $100 per barrel due to news background, now the same mechanism appears to be working in reverse. Prices are not only falling; they are beginning to retreat to levels that suggest a full restoration of shipping. According to the U.S. Department of Energy’s forecasts from June 9, Brent is expected to drop to $79 per barrel by 2027. Given the current pace of market movement, this level could be reached sooner than initially anticipated in the baseline scenario.
However, the baseline scenario and the real scenario are two different things. The International Energy Agency warned in its May report that even with a peace agreement, supply shortages will be felt until October 2026. The process of restoring shipping involves several stages. First, demilitarization takes the announced 30 days. Then insurers must restore coverage for tankers transiting the Persian Gulf. Finally, field operators will gradually begin to ramp up production from conservation. This does not happen simultaneously; the entire chain takes several months. This means that a price below $90 is not a matter of the next few weeks but rather a question for the second half of 2026 and into 2027.
The opening of the strait creates clear winners and losers, and the distribution does not align with traditional geopolitical expectations. Major global oil consumers, primarily China and India, will benefit from the restoration of supplies from the Persian Gulf and a noticeable reduction in energy prices. Iran itself will have the chance to restore export levels, which is critical for the survival of its economy. The unfreezing of assets and the gradual easing of sanctions will provide Tehran with the resources needed to repair its damaged oil and gas infrastructure.
Paradoxically, the United Arab Emirates (UAE) will also emerge as a winner, having left OPEC+ on May 1 specifically to freely increase production without alignment with cartel members. ADNOC, the national oil company of the UAE, plans to expand its capacity to 5 million barrels per day by 2027. This represents an increase of 1.5-1.6 million barrels per day. If the strait opens and shipping insurance is restored, the UAE will finally have a real opportunity to export this capacity to the global market instead of merely intent.
The losers will be oil producers outside the Persian Gulf. The opening of the strait signifies the entry of postponed supplies into the market. Between February and May 2026, Saudi Arabia, Iraq, Kuwait, and the UAE reduced production by over 11 million barrels per day. These volumes will start to re-enter the market. Simultaneously, there might be a softening or complete lifting of the oil embargo on Iran under the agreement with the U.S., creating a race for offers in the Middle East, where each producer will attempt to increase sales while prices remain relatively high.
Russian exports are in a vulnerable position. When Brent is priced at $95–107, exports work within a comfortable price zone, providing the budget with significant supplementary income above the base price of $60 established in the budgetary rule. A retreat to $79–80 would nullify these advantages entirely.
It is still premature to discuss the full resumption of oil, petroleum products, and other cargo transit through the Strait of Hormuz; we need to wait until June 19 when the memorandum between the U.S. and Iran is expected to be signed. If transit resumes after the signing, Brent prices could drop to below $70 per barrel within a relatively short timeframe, said Sergey Tereshkin, CEO 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 quotations for Urals and Brent, was $86 per barrel, it may fall below $60 per barrel by summer.
Otherwise, little will change for Russian oil producers: the volume of 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 other three major participants in the OPEC+ deal) collectively reduced production by more than 9 million barrels per day.
Overall, the oil market will begin to normalize in the second half of 2026.
This will manifest in increased competition among producers, considering the probable rise in production in the Middle East and potential easing of sanctions against Iran," says the expert.
OPEC+ already approved another increase in quotas by 188,000 barrels per day for July at the beginning of June. This is not an increase; it is a preparation for retreat. However, Russia's options here are limited. In May 2026, oil production in Russia was only 300,000 barrels per day lower than in February, whereas Saudi Arabia, Iraq, and Kuwait reduced production by more than 9 million barrels per day in total. This indicates that Russia is already nearing its ceiling, while the Saudis have significant headroom to increase their supplies.
Israel has explicitly opposed the agreement. According to The Guardian and Israeli media, Tel Aviv believes the memorandum does not constrain Tehran's missile program and effectively secures Iran's gains. Former advisor to Prime Minister Netanyahu on national security, Yaakov Nagel, called the proposed agreement "a significant mistake." This creates a real risk that Israel may seek to disrupt the implementation of the deal through a new incident in the region.
Republican critics of Trump are also opposing the agreement, albeit for different reasons. Ahead of the midterm elections, part of the Republican Party views the memorandum as a concession to Iran. This adds domestic political uncertainty to its implementation. Any major political event in the U.S. could reshape the power dynamics surrounding the deal.
In practice, the implementation may unfold along three main scenarios.
The first, baseline scenario: signing on June 19, demilitarization completed by mid-July, insurance restored in August. Brent moves towards $85–90 by the end of the third quarter and to $79–82 by 2027. This scenario is what the U.S. Department of Energy forecasts.
The second, more likely scenario considering the historical experience of similar agreements: implementation stalls. Signing occurs, but demilitarization proceeds more slowly than the stated 30 days, insurance returns with delays, and Israeli provocations or internal Iranian disagreements hinder the process. Prices roll back to $90–95 and maintain that level until the year's end.
The third, worst-case scenario: failure. The deal is either not signed on June 19 or is signed but quickly collapses due to a new incident. Prices bounce back above $100, and the market reverts to a state reminiscent of the Hormuz crisis.
The main uncertainty factor in the oil market in the second half of the year is the behavior of the UAE outside of OPEC+.
The Emirates can increase production in any manner and at any pace without coordinating actions with the rest of the cartel. In this sense, they become the main source of price unpredictability. Russia can control its production within OPEC+ but cannot dictate decisions made by Tehran or Abu Dhabi. Therefore, June 19 is not just a date; it is a turning point for recalibrating all assumptions related to the energy budget for 2026-2027.
Source: Vgudok
