Oil prices hovered near a three-month low as markets continued to price in the impact of a proposed U.S.-Iran agreement that could reopen the Strait of Hormuz and bring additional crude supplies back into the market. Crude oil prices on June 17 remained under pressure as investors assessed the potential for oil flows through the strategic waterway. According to The Economic Times, the focus now is on how quickly Middle Eastern producers can restore output and exports after wartime disruptions, with market participants tracking the pace at which shipping activity returns to the region. Even if the ceasefire remains in place, analysts warn that shipping operations through the Strait of Hormuz could take several months to return to normal levels, extending the recovery timeline beyond initial expectations.
Industry experts are warning that shipping companies will take at least two months to resume full Persian Gulf operations, with damaged refinery infrastructure requiring additional time for normalisation. Maulik Patel, head of research at Equirus Securities, stated that normalisation is therefore a Q3 story at the earliest, with a higher structural oil price floor being a challenge India will face for the remainder of 2026. The initial phase will involve physical mine clearance, rebuilding insurer confidence, and tanker repositioning, with traffic expected to recover to 50-60% of pre-war levels as insurers seek evidence of sustained stability. Saudi Aramco Chief Executive Officer Amin Nasser cautioned that disruptions in the Strait of Hormuz could delay a return to stability in global oil markets until 2027, according to The Economic Times, with prolonged interruptions potentially affecting nearly 100 million barrels of oil supply each week. India's oil-marketing companies are awaiting the formal signing of the agreement and subsequent reopening before expecting normal supply flows from the region to resume, given earlier unsuccessful attempts to reopen the waterway.
President Donald Trump declared on social media that ships of the world should start their engines, letting the oil flow, announcing the deal set to be signed this Friday. In a post on Truth Social, Trump said 'Ships are starting to move, many loaded up with Oil, out of the Strait of Hormuz. They are going along the Southern ' As per Mirae Asset Sharekhan, the formal signing is scheduled for June 19 in Switzerland with Pakistan serving as mediator. The agreement requires Iran's domestic government approval ahead of the Geneva signing, with Iran's Deputy Foreign Minister confirming the deal on state television but underscoring that Tehran would not begin implementation before the ink dried in Geneva. Under the deal, the United States would lift its blockade of Iran's ports, while Tehran would oil tanker traffic through the Strait, effectively blocked since US and Israel strikes on February 28. US President Donald Trump has said ships will be allowed to transit the Strait of Hormuz without paying tolls, though the finer details of the agreement have not yet been made public. However, geopolitical risks have not disappeared as Israel has distanced itself from both the April ceasefire and the latest U.S.-Iran agreement, raising questions about the long-term stability of the truce. According to The Economic Times, Israeli drone strikes hit three vehicles in southern Lebanon, killing at least four people and injuring several others, with U.S. President Trump publicly criticising Israel's military actions in a rare rebuke.
Despite tanker operator concerns, some shipping traffic has already begun resuming through the Strait of Hormuz. India's flagged LNG tanker Disha became the first Indian vessel to clear the strait after the pact, carrying 62,370 tonnes of gas. Officials said 10 India-flagged and five foreign-flagged ships have now crossed the strait, according to the Financial Times. The Strait of Hormuz, which typically carried one-fifth of the world's oil supply before the conflict, caused about 14 million barrels per day of output to be shut in. The closure of the Strait of Hormuz has created a bottleneck for the world's supply of oil, with about 18 million to 20 million barrels a day of raw and refined oil normally transiting the strait.
The immediate impact of the deal has been most visible in energy markets, with Brent crude prices falling nearly 20% from their recent highs and liquefied natural gas benchmark prices also easing as concerns over supply disruptions receded. As on June 15, underrecovery on petrol sales by public-sector OMCs had fallen by half to ₹3 per litre due to a sharp decline in crude oil prices, while diesel underrecovery fell to ₹27 per litre from ₹30 per litre on June 8. However, experts cautioned that the resumption of energy supplies from several West Asian countries could prompt major importers such as China to ramp up purchases, potentially adding upward pressure on prices. Jorge Leon from Rystad Energy noted that replenishment of crude inventories, including both commercial stocks and strategic petroleum reserves, is expected to add upward pressure on prices as flows recover, though the MoU lowers the probability of an immediate oil shock. Meanwhile, China's crude oil throughput in May fell 9.1 per cent on the year to the lowest level in almost four years, signalling that refiners were starting to draw on stockpiles amid the Iran war. All eyes now turn to the Federal Reserve meeting as energy prices are among the factors that will be monitored by policymakers, with markets widely expecting the central bank to leave borrowing costs unchanged.
