West Texas Intermediate (WTI) crude oil prices fell to a three-month low of $73.36 per barrel on Thursday, driven by optimism surrounding a peace agreement between the United States and Iran and the anticipated reopening of the critical Strait of Hormuz shipping route [1]. The US President Donald Trump and Iranian President Masoud Pezeshkian signed the memorandum of understanding at the Palace of Versailles in France on Wednesday, which includes provisions for toll-free passage through the Strait of Hormuz for at least 60 days, waivers of sanctions on Iranian oil, the release of frozen Iranian funds, and a $300 billion reconstruction fund for war damages [1][2].
Despite the agreement, industry experts caution that it will take weeks to clear the shipping backlog and normalize traffic through the Strait of Hormuz, which has been disrupted for nearly four months due to war [2]. Adam Sharpe, vice president of editorial at Lloyd's List Intelligence, stated that a phased restart is the most likely scenario, with oil tankers and LNG carriers expected to receive priority access [2]. Before the conflict, the Strait saw approximately 650 to 770 cargo-vessel transits per week, or 90 to 110 per day, but a return to these levels is expected to be gradual rather than immediate [2].
The US Energy Information Administration (EIA) reported a significant decline in US commercial crude inventories, with stockpiles falling by 8.26 million barrels in the week of June 12—almost double the expected drawdown—marking the tenth consecutive weekly decline and leaving inventories at their lowest levels in over 40 years [1]. However, the market reaction to this bullish inventory data was muted, as optimism about the peace deal and the reopening of the Strait outweighed concerns about oil shortages [1].
Market watchers and industry executives highlighted unresolved logistical and security questions, including whether vessels will need prior permission, the potential for service charges, acceptance of foreign naval escorts, and the need for mine clearance [2]. Economic intelligence provider QuantCube Technology noted that shipping data has not yet shown a meaningful increase in oil export departures from Saudi Arabia, the UAE, or Iraq, with tankers in the Dammam region loaded and waiting offshore [2].
Negotiations to implement the US-Iran agreement are set to continue on Friday at the Bürgenstock resort in Switzerland, according to the Swiss Ministry of Foreign Affairs [1].
CONCLUSION
WTI oil prices have dropped sharply on hopes of a US-Iran peace deal and the reopening of the Strait of Hormuz, but experts warn that restoring normal shipping flows will take weeks. Despite bullish US inventory data, the market remains focused on the gradual resolution of logistical challenges and the timeline for resuming full oil exports through the Strait.