Oil Prices Drop, Market Monitors US-Iran Peace Progress
World oil prices weakened on Monday (June 22, 2026) after Iran announced significant progress in peace talks with the United States. This sentiment raised market hopes for the restoration of oil flows from the Persian Gulf, particularly through the Strait of Hormuz, a vital route for global energy trade. Brent fell below US$79 per barrel, while West Texas Intermediate (WTI) moved closer to US$75 per barrel.
Iranian Foreign Minister Abbas Araghchi said discussions at the Swiss resort of Bürgenstock over the weekend yielded significant progress, including efforts to de-escalate the conflict in Lebanon. From the United States, Vice President JD Vance said Iran had agreed to an invitation for International Atomic Energy Agency (IAEA) inspectors. This development is a positive signal for the market, although the diplomatic process remains fragile and fraught with political tensions.
Initially, negotiations were difficult. At one point, Iran announced it would suspend talks after US President Donald Trump renewed threats of military action against Tehran for its support of proxy groups in the Middle East. This threat caused Brent to surge in early trading, before eventually turning lower as the market assessed that talks were still ongoing and the possibility of a deal was not yet closed.
Market attention is now focused on the Strait of Hormuz. Although Iran claims to have re-closed the waterway, shipping data shows tanker activity has begun to increase. Millions of barrels of oil reportedly continued to flow through the waterway over the weekend. Iran has also begun to increase open oil shipments through Hormuz, including cutting cargo prices offered to China, its main customer.
Analysts believe Hormuz traffic will be an important indicator of progress in physical oil supplies and diplomatic developments. The smoother the tanker transit, the greater the market's likelihood that supply from the Persian Gulf region is recovering. The Joint Maritime Information Center has also downgraded the maritime security threat level in the Strait of Hormuz and the Gulf of Oman to medium, which has helped ease market concerns.
However, the risks have not completely disappeared. Previous wars in the Middle East have squeezed supplies from a region that accounts for about a third of global oil production. Although oil prices have fallen in recent weeks, they remain higher than before the war. A peace deal does have the potential to reopen large supply flows, but a full recovery could still take time due to security factors, ship insurance, and buyers' readiness to return to the region.
On the supply side, Persian Gulf producers are beginning to prepare to increase production. Kuwait is said to have rescinded its previous force majeure notice, while Abu Dhabi National Oil Co. (ADNOC) has asked customers to resume supply shipments from within the Persian Gulf. However, some analysts still warn that the market may be overly optimistic about the smooth flow of oil from the Middle East. As long as regional security remains stable, oil prices have the potential to remain volatile, although short-term sentiment tends to weigh on Brent and WTI. (gn)
Source: Newsmaker.id
