Global oil prices have tumbled to their lowest levels since early March, with Brent crude sliding decisively below the $80-per-barrel threshold for the first time in over three months. The catalyst is a provisional memorandum of understanding between Washington and Tehran, scheduled to be signed on 19 June in Switzerland, which pledges to reopen the Strait of Hormuz and restore the free flow of crude through the world’s most critical energy chokepoint. On Tuesday, Brent futures for August delivery lost 5.1% to settle at $78.96, while West Texas Intermediate shed 5.8% to $76.05. By midweek, prices stabilised around $78.80 and $75.80 respectively, as traders weighed the details of the accord against lingering uncertainty over the timeline for full shipping normalisation.

The sell-off marks a dramatic unwinding of the geopolitical risk premium that had been baked into crude since the US-Iran conflict erupted on 28 February. At the height of hostilities, Brent briefly surged towards $120 per barrel, and the Omani benchmark touched $166.96 for May delivery. Viewed from Tehran, the prospective deal offers a path to resume petroleum exports that had been severely curtailed by the naval blockade of Hormuz. President Trump stated that the strait would be reopened “without cost” once the memorandum is signed, a signal that has encouraged traders from Singapore to Mumbai to price in a substantial return of Iranian barrels to global markets.

Forecast revisions have been swift and severe. Analysts at Citi slashed their third-quarter Brent projection from $110 to $75 per barrel, and their fourth-quarter estimate from $90 to $70, while marking down the 2027 average to $65. In Moscow, where the Urals blend trades at a discount to Brent, institutions such as Sovcombank and BCS Global Markets now see Brent in a $75–85 range for the third quarter, with a possible slide towards $70 by year-end. The common thread is an expectation that the risk premium will continue to evaporate, though analysts caution that the path to a durable peace remains fragile and that any breakdown in talks could swiftly reverse the trend.

For now, the market is focused on Friday’s signing ceremony. Should the memorandum hold and Hormuz traffic resume without incident, the pre-conflict floor of around $70 per barrel for Brent comes back into view. Yet the experience of the past four months underscores how rapidly sentiment can shift in a region where diplomatic breakthroughs and military escalations have repeatedly caught investors off guard.