The peace accord between the United States and Iran which was remotely signed on June 17^th, 2026, has now completely collapsed with both protagonists increasing hostilities, and the Strait of Hormuz is once again closed to all traffic. The US has also blockaded Iranian oil exports, having a negative effect on oil prices with the benchmark brent crude now trading at $84.20 – $85.20p/bl (per barrel), an increase of circa 18% – 20%, and WTI (West Texan Intermediate) trading at circa $80.34p/bl, an increase of circa 13% – 15%.

Iranian officials have subsequently announced that “Regional energy exports are either shared by all or denied by all”. Furthermore, experts in this arena have observed that the IRGC (Islamic Revolutionary Guards Corps) may well employ their Houthi partners/allies located in Yemen to close the Bab el-Mandeb gateway* to the Red Sea, putting that energy artery at risk as well as the currently shut Strait of Hormuz. The US military may well find themselves to be soon fighting on two fronts. 

*Bab el-Mandeb gateway – Often translated from Arabic as the “Gate of Tears” or the “Gate of Grief”, possibly an apt description considering the current state of affairs in the Middle East. It is located between the Horn of Africa and the Arabian Peninsula, and is one of the world’s most critical maritime chokepoints. Historically, the gateway has handled circa 10% – 12% of all global trade and acts as a primary artery for energy transportation between Asia, the Middle East and Europe. Analysts advise that millions of barrels of petroleum products transit the gateway daily and its closure will have a direct effect on the global economy.

Analysts have noted that once the peace was signed, exports from the Persian Gulf recovered to just over 80% of pre-conflict levels, (Iranian crude exports were estimated in the region of 1.5 million – 2 million bpd – barrels per day), but last week, it had declined to under 50% or approx 11 million bpd. Furthermore, analysts noted that if the Strait of Hormuz remains closed, benchmark brent crude could be above the $110pbl come Q4 this year, and could be even higher if Houthi’s are successful in disrupting shipping in the Bab el-Mandeb gateway.

Experts suggest that once again, global inflation will be negatively impacted leading to further rises in the cost of living including fuels at the pumps, foodstuffs and airline prices. Indeed, once the Strait of Hormuz reopened data shows that oil prices plunged leading to an easing of inflation in such countries as the United States, China, Germany, France, Italy and Brazil. What happens next is dependent on the two protagonists, but it seems that neither side is prepared to budge with Iran not prepared to give up their nuclear programme including their uranium enrichment— which is a key component of nuclear weapons.

Experts suggest that there is no way Iran will allow a free passage through the Strait of Hormuz and will accordingly charge tariffs. Iran currently holds the upper-hand in the Strait, and some independent military experts are saying that short of the United States conducting an all-out war with Iran, this stalemate will continue until President Trump declares victory. Experts note that even if he secures a victory, it is likely to be pyrrhic—a win achieved at such a high cost that it ultimately feels like a defeat. Analysts argue that regardless of how events unfold between now and November, the fallout will likely cost him the mid-term elections, with some news outlets already labeling the conflict ‘Trump’s Vietnam’.

Earlier in the year a number of energy commentators were hinting at a potential price of $200 and above for a barrel of oil if the USA/Iran/Israel conflict continued into June. However, it’s the second week of June and Brent Crude is sitting at $90.54 p/bl, and WTI (West Texas Intermediate) is currently sitting at $93.09 p/bl. The price of crude oil has largely been suppressed to below the $100 – $120 mark despite the Middle East crisis, which has shut the Strait of Hormuz where circa 20 million barrels of oil flow daily — being roughly 20% of global demand.

The conflict started on February 28^th, just over three months ago, so why has the global economic catastrophe predicted by a number of traders, oil executives, analysts and experts not appeared in the form of $200 plus per barrel of oil? Analysts advise that the economic shock from the closure of the Strait of Hormuz has to some extent been nullified by a drop in demand by China, record exports from the United States, a trickle of oil export sneaking through the strait, the Saudi Arabian pipeline*, to the Red Sea and a pre-war surplus. 

Saudi Arabian pipeline – This pipeline is known as the Petroline and stretches for 746 miles from the Abqaiq oil fields in the eastern province (close to Bahrain and Qatar on the Persian Gulf coast) to the port city Yanbu on the west coast by the Red Sea. The pipeline was built during the 1980’s allowing Saudi Arabian oil exports to bypass the tanker war in the Persian Gulf, which was a result of the war between Iran and Iraq. The pipeline serves as a strategic and critical lifeline not only to Saudi Arabia but to the global economy and is currently pumping 7 million barrels a day, which is the pipeline’s maximum capacity. 

One of the big surprises has been China, who up until 28^th February were the world’s largest importer of crude oil, and according to data released, the government has slashed oil imports by circa 40%. Analysts have estimated that the reduction in oil imports by China is offsetting roughly 1/3 – 1/5 of the barrels that have been lost due to the US/Iran/Israel conflict. To compensate for cuts in crude imports, China’s refineries are processing oil from strategic and commercial stockpiles which analysts estimate to be around 1.4 billion barrels. Furthermore, the country is relying on increased domestic shale oil extraction and forcing petrochemical plants to deplete their own reserves. 

The United States has also proved pivotal in keeping the price of crude oil down, as May figures show that American crude and fuel exports were in excess of 2 million barrels per day, higher than the average for the whole of 2025. Indeed, U.S. crude oil exports reached a record high of 5.6 million bpd (barrels per day), whilst combined exports of crude and refined petroleum products/ fuel hit circa 9 – 10 million bpd. Elsewhere, governments from around the world have coordinated the release of strategic reserves, Qatar it is suggested is using “Dark Fleet”* operations and other Persian Gulf exporters e.g., the UAE, are rerouting shipments through alternative export routes. 

*The Dark Fleet – Is a large clandestine network of aging oil tankers, shell companies and maritime service providers that operate outside international regulations to transport sanctioned oil primarily from Iran, Russia and until recently Venezuela and now allegedly Qatar. Experts and analysts estimate the fleet to be roughly in the region of 1,470 tankers that use deceptive practices such as disabled tracking systems, forged documentation and ship-to-ship transfers in open waters that enable them to bypass international sanctions.

Despite recent rhetoric emanating from the White House suggesting talks with Iran are on-going and peace is in sight, today, any compromise deal let alone peace seems to be miles apart, with Iran’s weaponised plutonium being at the heart of any negotiations. Many experts are saying that the current global strategy of keeping oil prices suppressed is unsustainable, and if China comes back into the market, prices will only move higher. A speedy end to the conflict will certainly help as this would allow for the reopening of the Strait of Hormuz, however, some analysts note that if the war is still blazing in September, perhaps $200 p/bl could well become a reality by the end of 2026 or early 2027.