Vice President JD Vance has confirmed that Iran has agreed to keep the Strait of Hormuz toll-free for oil transit, as part of a memorandum of understanding between Washington and Tehran. This agreement has led to a significant drop in oil prices, with WTI and Brent crude falling to approximately $70 to $73 per barrel by late June 2026.
Oil Supply Resumes
The Strait of Hormuz, a critical oil chokepoint, has seen daily oil volumes climb to between 12.5 million and 16 million barrels, although this still falls short of the pre-conflict level of around 20 million barrels per day. Vessel traffic has also increased, with around 240 ship passages through the strait in a recent week, although this is still below the pre-war standard of 130 to 150 daily crossings.
Market Impact
The agreement has had a significant impact on oil prices, with a drop of roughly 40 percent from wartime peaks near $120. US gasoline prices have also fallen, dropping below $4 per gallon for the first time since the conflict escalated. However, reports of mines in the region and uncertainty over long-term transit protocols may continue to affect oil prices and vessel traffic.
