Oil Falls to Pre-War Lows as Hormuz Reopens, but the Truce Wobbles
Crude has round-tripped much of its wartime spike as Gulf shipping resumes, but the weekend's strikes show how fragile the relief is.
For a few days this week the most important number for American drivers was finally moving the right way. Brent crude, the global benchmark, settled near $72 a barrel on Friday, its lowest since February 27, before the U.S.-Iran war began, and the relief was starting to show up where people feel it, at the pump. Then, over the weekend, the guns came back out.
The slide had one cause above all: oil was moving again through the Strait of Hormuz. More than 20 tankers carrying about 35 million barrels of crude have left the Persian Gulf since Washington and Tehran agreed to reopen the waterway, according to the trade-tracking firm Kpler, vessels that had been stranded for more than three months.
A round trip in a week
The price action read like a market lurching between war and peace. Crude had round-tripped much of the premium it built up during the conflict as the truce took hold. On Thursday it snapped back the other way, with West Texas Intermediate up more than 2% to settle at $71.92 and Brent climbing 2.1% to $75.26, after Iran attacked a cargo vessel near Dahit, Oman. By Friday, with more tankers slipping through the strait, crude gave it all back and then some, sliding more than 3% to a Brent settle of $71.99.
Maritime security advisory from UKMTO on the Strait of Hormuz
The catch is that none of this rests on a durable peace. The same strait dragging prices down is the lever Iran keeps reaching for. U.S. Energy Secretary Chris Wright said flows were already close to pre-war levels, with at least 20 million barrels leaving the strait in a single 24-hour stretch, and insisted Iran could not shut it again. The market is less certain.
Why the relief is fragile
"Crude's slide is entirely sentiment-driven," Vandana Hari of Vanda Insights said as the truce first took hold, warning that traders were "front-running" a smooth reopening. The weekend's strikes are exactly the kind of setback that pricing-in the best case leaves exposed. Even so, the longer-term bet on the desks is for cheaper oil: Citi expects Brent to fall to $60 to $65 a barrel over the next six to 12 months if Hormuz flows normalize.
For households, the math is simple even when the geopolitics is not. Cheaper crude eventually means cheaper gasoline, though the pump lags the barrel by a few weeks. It is the same pattern that took Brent below $76 last week. The risk now is that the discount drivers are about to enjoy turns out to be a loan rather than a gift, written against a ceasefire that both Washington and Tehran spent Sunday morning testing toward the breaking point.
