Brent Crude Falls Below $70 as Iran-US Ceasefire Reopens the Strait of Hormuz
- ▸Brent crude fell below $70 a barrel on July 1, 2026, after a US-Iran memorandum of understanding signed June 18 ended the conflict and reopened the Strait of Hormuz.
- ▸The EIA expects an adjustment period through Q3 2026, followed by a return to oversupply — inventory builds of 2.7 million barrels/day in Q4 2026 and 5.0 million barrels/day in 2027.
- ▸Damage to LNG liquefaction infrastructure in Qatar is expected to cause a cumulative loss of around 120 billion cubic meters of LNG supply between 2026 and 2030, a longer-lasting effect than the oil-price shock.
The conflict began February 28, 2026, and its closure of the Strait of Hormuz — the passage between Gulf oil producers and open water — was the single biggest supply shock to hit oil markets in years. For four months, roughly a fifth of global oil trade had no direct route to market, forcing importers to draw down inventories, bid for alternative barrels, and in some cases idle refining capacity.
The June 18 MOU changed that calculus almost overnight. With the strait reopening and hostilities ending, the risk premium that had been baked into oil prices — the extra dollars per barrel traders demand to compensate for the chance of further disruption — began unwinding immediately. By July 1, Brent had round-tripped back to roughly where it started.
That doesn't mean the market simply resets to where it was in February. The US Energy Information Administration's July Short-Term Energy Outlook expects an initial adjustment period lasting through most of the third quarter of 2026, as inventories, shipping routes, and refinery runs normalize. After that, the EIA projects markets swing back toward oversupply — inventories are forecast to build by an average of 2.7 million barrels a day in the fourth quarter of 2026 and 5.0 million barrels a day in 2027, as supply growth outpaces demand and pushes prices lower still.
India is one of the world's largest importers of both Middle Eastern crude and LNG, which put it directly in the path of the conflict-driven price spike between February and June 2026. The reopening of the Strait of Hormuz and the return of Brent to pre-conflict levels is a direct relief to India's import bill and current account. The lasting LNG supply damage out of Qatar is the part of this story India's energy planners will need to watch longest, given India's growing reliance on LNG imports to meet rising gas demand.
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Cite This Article
Khagan Rao. (2026, July 13). Brent Crude Falls Below $70 as Iran-US Ceasefire Reopens the Strait of Hormuz. EconoLens. https://econolens.co.in/news/brent-oil-below-70-iran-us-ceasefire-july-2026
Khagan Rao is an economist and analyst specialising in global monetary policy, fiscal frameworks, and international trade. He tracks publications from the IMF, World Bank, BIS, and RBI to deliver accessible, data-driven analysis for a global audience.