Why oil markets should not take Hormuz peace for granted

Why oil markets should not take Hormuz peace for granted | AGBI
June 17, 2026
About us
Partner with AGBI
Login
|
Register
Skip navigation
Sectors
Aviation
Artificial Intelligence
Business of Sport
Construction
Cybersecurity
Defence
Economy
Energy
Entrepreneurs
Finance
Food & Drink
Gaming
Giga-projects
Health
Industry
Infrastructure
Logistics
Manufacturing
Markets
Oil & Gas
Real Estate
Retail
Sustainability
Tax
Tech
Telecoms
Tourism
Trade
Transport
Middle East
All Middle East
GCC
UAE
Saudi Arabia
Bahrain
Kuwait
Oman
Qatar
Dubai
Abu Dhabi
Turkey
Egypt
Morocco
Iraq
Jordan
Algeria
Lebanon
Libya
Opinion
All Opinion
Alex Malouf
Amena Bakr
Andrew Cunningham
Austyn Allison
Frank Kane
John Grant
Martin Keulertz
Matein Khalid
Dr Nasser Saidi
Robin Mills
Simon Chadwick
Analysis
Economic data
UAE
All GCC data
All Mena data
Bahrain
Egypt
Kuwait
Oman
Saudi Arabia
Turkey
Qatar
Topics
Blockchain
Cryptocurrency
Donald Trump
Electric vehicles
Food security
Hydrogen
IPOs
Islamic finance
M&A
Neom
Opec
Red Sea Global
Saudi Vision 2030
Water
Saudi Arabia giga-projects
Giga-projects tracker
AlUla
Amaala
Diriyah
Jeddah Central
Neom
New Murabba
Qiddiya
The Red Sea
Roshn
Rua Al Madinah
World
Africa
Asia
Europe
North America
Latin America
Companies
Interviews
People & Lifestyle
About us
Partner with AGBI
Authors
Executive Team
Login
Register with AGBI
Finance
Energy
Construction
Transport
Tech
Sport
Opinion
Analysis
Economic Data
All sections
Opinion
Oil & Gas
Why oil markets should not take Hormuz peace for granted
While equities are up and oil down, the US-Iran MoU is not even strictly a deal
By
Frank Kane
June 15, 2026 4:14 PM
X
LinkedIn
Facebook
Copy link
The logistics of swiftly moving oil through the Strait of Hormuz again is far from straightforward Copyright: Reuters
News that the US and Iran had agreed an MoU to end hostilities and reopen the Strait of Hormuz produced exactly the market reaction President Donald Trump would have wished for – crude prices down, equity markets up.
From an Arabian Gulf perspective, there is nothing wrong with that. Anything that de-escalates is better than the alternative and we all want to get back to business as soon as possible.
Brent crude fell more than 4 percent to about $83 per barrel on the Hormuz reopening signal, with traders anticipating a tsunami of crude heading for the exit through the strait.
Equity markets moved in the opposite direction. Asian markets gained in early trading on the calculation that a Gulf ceasefire heads off a global recession that has been building since March.
Both moves make a kind of sense, but neither, on reflection, makes complete sense.
While a pause is welcome, this is not peace. It is not even, strictly speaking, a deal. An MoU tells you what people agree on, not what they disagree on – and what they disagree on is still formidable.
Start with the most immediate problem: the logistics of moving oil. The strait has been running at roughly 2 percent of its pre-war throughput.
An unknown volume of crude – industry estimates put it in the hundreds of millions of barrels – has been stored, shut in or put into floating storage since February. The MoU envisages pre-war shipping volumes being restored within 30 days but that is an ambitious timeline. The physical infrastructure of the global energy market does not flick on and off like a light switch.
Nor do we have any definite information on a possible Iranian toll on Hormuz shipping , which the US and the Gulf countries regard as a deal-breaker. There is an awful lot of devil in that detail.
Then there is insurance. The big global marine underwriters effectively withdrew cover from Hormuz transit months ago, when war-risk premiums reached prohibitive levels.
For oil to flow freely, insurers need to be convinced that this ceasefire represents a return to genuine peacetime conditions – and insurers, unlike politicians, do not factor in optimism when they make their calculations. Instead, they deal in risk.
Further reading:
Iranian ‘arrangements’ could reshape Hormuz shipping
Oil drops as Trump announces peace deal with Iran
War is transforming how the world views Fujairah
Until the major protection and indemnity clubs formally restore standard cover, the commercial incentive to transit remains severely constrained regardless of what any MoU says.
Then there is Israel.
In the single most important public reaction to the MoU, prime minister Benjamin Netanyahu told Trump directly that Israel “does not consider itself committed to the Lebanese clause in the US-Iran agreement”.
Have markets priced in Israel’s capacity to destroy a deal its government hates? Israel’s ground invasion of Lebanon certainly shows little sign of retreat.
Israel fears that the US-Iran agreement could sharply restrict military freedom of action in Lebanon – which is precisely why it has no intention of honouring that clause.
Iran’s reaction to further Israeli action in Lebanon is the critical variable. Tehran has agreed to this MoU because it needs to – the economic damage of the US-Israeli assault has been severe and Iran needs to replenish both its treasury and its arsenal.
But Tehran has no faith in American or Israeli commitments after two violent assaults in a year. A single significant Israeli strike on Lebanese territory could hand hardliners in Tehran exactly the pretext they need to walk away, and the 60-day window for nuclear talks that the MoU envisages may collapse before it begins.
Genuine grounds for optimism deserve acknowledgment. Quiet diplomatic conversations between GCC officials and their Iranian counterparts in recent weeks have hinted at a possible future regional architecture that could be the basis for long-term peace. Discussions revolve around the Gulf states and Iran managing their own affairs without the destabilising intervention of outside powers.
That is a long way from realisation, and could depend on what the final MoU says about Iran’s regional proxies. But at least the conversations are happening, and that alone marks a shift.
You could argue that the oil market has overdone the good news. Brent in the low 80s is not pricing in these uncertainties, nor is it pricing in the eventual need to replenish strategic reserves, which have been drawn down heavily across consuming nations since March.
For now, the consensus is for a 30- to 60-day window of gently falling or flat prices, followed by a recovery through the rest of the year. That seems about right, provided the ceasefire holds and the MoU provisions are agreed and implemented.
But those are very big provisos.
Frank Kane is Editor-at-Large of AGBI and an award-winning business journalist
Read more from Frank Kane
Welcome to the new world of oil demand destruction
Who are the real targets of Trump’s war on Iran?
Sharply different views on the Gulf’s economic outlook
Register now: It’s easy and free
AGBI registered members can access even more of our unique analysis and perspective on business and economics in the Middle East.
Why sign uP
Exclusive weekly email from our editor-in-chief
Personalised weekly emails for your preferred industry sectors
Read and download our insight packed white papers
Access to our mobile app
Prioritised access to live events
Register for free
Already registered? Sign in
I’ll register later
Advertisement
Related Content:
Energy , Oil & Gas
Oil & Gas
ConocoPhillips to sign gas deal with Syrian government
June 16, 2026
Oil & Gas
Libya inks deals with Eni, QatarEnergy and Repsol
June 16, 2026
Analysis
Markets
Markets cheer Iran deal but the Gulf remains cautious
June 16, 2026
Oil & Gas
Jordan extends Risha gas field concession to 2061
June 15, 2026
Trending
Businesses remain weak link in Gulf cyber defences
June 17, 2026
Oman has gained from Iran war but risks persist, says IMF
June 17, 2026
Saudi housing sector cools as buyers wait for better times
June 16, 2026
Shipping industry urges caution on Hormuz reopening
June 16, 2026
Riyadh Air gets approval to fly to United…

Text scraped from the landing page for research purposes. © respective owners. This text is sourced from the advertiser's public landing page; for removal, contact dmca@luba.media.