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Global crude oil prices have fallen sharply after the end of hostilities between the United States and Iran and the gradual normalization of shipping through the strategically important Strait of Hormuz, erasing much of the geopolitical risk premium that had driven prices to multi-month highs.

Brent crude, the international benchmark that determines the price of around 80 percent of globally traded oil, was trading near $72–73 per barrel on June 25, while US West Texas Intermediate (WTI) crude slipped below $70 per barrel, marking the lowest levels since before the outbreak of the conflict.

The decline comes after a tentative peace agreement between Washington and Tehran reduced fears of supply disruptions from the Persian Gulf and allowed tanker traffic through the Strait of Hormuz to recover toward normal levels.

War Had Triggered Sharp Price Surge

At the height of the conflict, oil markets reacted strongly to concerns that Iran could disrupt or close the Strait of Hormuz, one of the world’s most critical energy chokepoints through which roughly one-fifth of global oil consumption passes.

During the escalation, Brent crude climbed to around $95 per barrel in early June, while some market analysts warned prices could surge further if the waterway was blocked.

Market volatility intensified as traders priced in the risk of interrupted supplies from major Gulf producers including Saudi Arabia, Iraq, Kuwait, the United Arab Emirates and Iran itself.

However, the situation changed rapidly after diplomatic efforts gained momentum and both sides signaled willingness to end the conflict.

Hormuz Traffic Returns

According to US energy officials, approximately 20 million barrels of oil exited the Strait of Hormuz in the past 24 hours, indicating that crude flows have returned close to normal levels despite ongoing demining and security operations.

Reuters reported that more than 20 million barrels moved through the strait in a single day, helping calm fears of a global supply shock. Tanker operators have gradually resumed normal routes, while Oman and international maritime agencies continue to coordinate safe passage through the waterway.

The restoration of shipping activity has prompted traders to unwind the “war premium” that had been embedded in oil prices for weeks.

Brent Erases War Gains

Market analysts say Brent crude has now erased nearly all gains recorded during the conflict period.

On Thursday, Brent futures fell to around $72.68 per barrel, while WTI dropped to approximately $69.58 per barrel, levels last seen before the conflict began.

Some reports indicate Brent briefly traded as low as $72.24 per barrel, representing a decline of nearly 20 percent from peak levels recorded during the crisis.

The reopening of Hormuz, improving supply conditions and expectations that Iran may increase exports following a reduction in tensions have all contributed to the sharp decline.

Positive News for Oil-Importing Economies

The drop in crude prices is expected to provide relief for oil-importing countries such as Nepal, India and other South Asian economies, where fuel imports are a major contributor to trade deficits and inflation.

Lower international oil prices generally reduce import bills, ease pressure on foreign exchange reserves and help moderate transportation and production costs across the economy.

Analysts expect oil markets to remain volatile as investors monitor the durability of the US-Iran peace arrangement and developments in the Middle East. However, the immediate threat of a supply disruption through the Strait of Hormuz has significantly diminished, leading markets to focus once again on underlying supply-demand fundamentals rather than geopolitical risks.