Benchmark oil prices tumbled by more than 10 per cent in the week ending Friday, June 26, following a ceasefire agreement between the US and Iran that reopened the Strait of Hormuz and restored crude exports from the Persian Gulf.
The US-Iran peace agreement and associated ceasefire took effect on June 19, 2026, after officials from both countries signed a memorandum of understanding in Geneva aimed at ending months of hostilities.
The agreement led to the immediate lifting of the US naval blockade and the reopening of the Strait of Hormuz, a key global shipping route through which a significant share of the world's oil exports passes.
The easing of tensions saw Brent crude prices fall to around $72 (Sh9,334.08) per barrel on Friday, the lowest level since February 27.
The decline was driven by a sharp increase in shipping through the Strait of Hormuz as vessels resumed normal operations, allowing Persian Gulf oil exports to recover to roughly 75 per cent of pre-war levels.
Major oil-producing countries in the Middle East have also accelerated production in response to the improved security situation.
Saudi Arabia resumed loading tankers at its Ras Tanura terminal, while the United Arab Emirates, Kuwait and Qatar increased crude supply despite facing shortages of available tankers.
Iraq has also sought a higher OPEC production quota to recover sales lost during the conflict.
The improved supply outlook pushed Brent crude to record its biggest weekly decline in a month, easing fears of prolonged disruptions that had sent energy prices soaring during the conflict.
Lower oil prices are expected to reduce fuel import costs for oil-importing countries and ease inflationary pressures if the ceasefire holds.
However, the fragile truce has come under fresh strain after the US military launched strikes on Iranian missile and drone storage facilities as well as coastal radar positions on Friday.
The action followed an attack on a cargo ship in the Strait of Hormuz on Thursday, which Washington blamed on Iran and described as a violation of the ceasefire agreement.
“The unwarranted aggression against commercial shipping by Iranian forces clearly violated the ceasefire,” US Central Command said in a statement.
“Furthermore, Iran's dangerous behaviour undermined freedom of navigation as commerce increasingly flows through the vital international trade corridor.”
Iran rejected the accusations, insisting the cargo ship had used an unauthorised route through the Strait of Hormuz and blamed Washington for breaching the agreement.
The Islamic Revolutionary Guard Corps warned that if the aggression is repeated, their response will be more extensive.
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