U.S.-Iran MoU Drives Brent Below $80 on Hormuz Hopes

On June 16 global oil prices fell as traders reacted to reports that a U.S.-Iran memorandum of understanding would lead Iran to reopen the Strait of Hormuz. Brent touched an intraday low of $79.63 before trading back above $80, while West Texas Intermediate declined 4% to $77.43. WTI has dropped nearly 20% since the start of June.

Details of the memorandum have not been formally released. Multiple reports say the pact would require Iran to reopen the Strait of Hormuz in return for sanctions relief, access to unfrozen assets and potential new investment. Market participants, including algorithmic traders, moved quickly to price a near-term resumption of Persian Gulf flows.

Analysts cautioned that market moves based on the reports may overstate how fast physical supply can return. Market research group Bull Theory estimated about $58 billion in oil infrastructure damage across the Gulf and referenced assessments that more than half of roughly 80 attacked energy facilities were severely damaged.

Bull Theory wrote: “Equipment needs to be inspected and certified safe before restart. Workers need to return to facilities that were recently under attack. Insurance markets do not immediately return to cover a region that was at war last week.”

Energy investment firm HFI Research and other observers noted a gap between trading in financial markets and the physical oil market. They said global oil inventories remain low after an extended outage of roughly 11 million barrels per day during the conflict and that paper trading has pushed prices lower on expectations of peace.

The memorandum reportedly sets a 30-day timeline to reopen the Strait of Hormuz. Industry sources said restoring damaged fields and terminals will require inspections, repairs, certification, returning staff and renewed insurance and shipping arrangements, a process that could take months or years for heavily damaged facilities.

Prices fell on June 16 as markets priced in the reported agreement. Official details of the pact remain scarce and agencies and industry contacts expect the physical recovery of Gulf supplies to be gradual, a factor likely to affect oil market volatility in the coming months.