Oil prices hold near pre-war levels as U.S.-Iran peace hopes ease Hormuz fears

Brent crude ended the first half of 2026 trading near $73 a barrel, completing a dramatic reversal from wartime highs after diplomatic progress between Washington and Tehran unwound much of the geopolitical risk premium that had defined global energy markets for months.

On Friday, Brent crude futures rose modestly to around $72.30 a barrel, with both benchmarks on track to close the week little changed. The subdued trading marked a stark contrast to late April, when Brent surged to an intraday high of $126.41 — a four-year peak — as the U.S.-Israel-Iran conflict and the closure of the Strait of Hormuz threatened to choke off a fifth of the world's oil supply.hdfcsky+3

From War Premium to Normalization

The conflict, which began on February 28 when U.S. and Israeli forces launched coordinated strikes against targets inside Iran, sent oil prices soaring roughly 60% from pre-war levels near $70 a barrel. Iran's closure of the Strait of Hormuz — the world's most critical oil chokepoint — amplified supply fears and pushed Brent to its April peak.youtube+3

The turning point came in mid-June, when after 108 days of war, the U.S. and Iran announced a preliminary agreement brokered by Pakistan. The deal, formalized through a memorandum of understanding signed in Geneva, included reopening the Strait of Hormuz to toll-free shipping and lifting the U.S. naval blockade of Iran.aa+1

Shipping Flows Resume

U.S. Energy Secretary Chris Wright said in late June that oil movement through the Strait of Hormuz had returned to pre-conflict levels, with military escorts facilitating the exit of tankers. Around 20 million barrels of crude passed through the waterway in a single 24-hour period, according to Wright, who spoke at the Reuters Global Energy Forum.reuters

The flood of supply pushed Brent to its lowest level since before the war on June 24, settling at $73.74 that day. Physical crude shipments were being sold at discounted rates as markets absorbed the rapid increase in Middle Eastern supply, with Iran poised to boost sales following a temporary lifting of U.S. sanctions.reuters

Cautious Outlook

Analysts expect prices to remain range-bound in the near term, supported by stable demand but capped by rising Gulf exports. However, uncertainty lingers: the memorandum of understanding established only a 60-day negotiation window to settle Iran's nuclear stockpile, sanctions, and frozen assets. Gulf News ↘ 13.24% reported that Murban crude posted the steepest recent decline among benchmarks, falling nearly 5% on July 2.gulfnews+3

J.P. Morgan JPMorgan Chase & Co. ↘ 4.19% revised its Brent forecast for the second half of 2026 downward, projecting an average of $86 per barrel in the third quarter and $80 in the fourth — levels that still imply a premium over current spot prices, reflecting the fragility of a peace process that remains, as one diplomat described it, a "roadmap" rather than a final deal.time+1