Brent crude oil fell below $80 per barrel on Monday for the first time since March, as traders priced in the likelihood of a U.S.-Iran peace deal that could reopen the Strait of Hormuz. President Trump announced on Truth Social that "ships are starting to move, many loaded up with Oil, out of the Strait of Hormuz." The development comes just ahead of Kevin Warsh's first Federal Reserve meeting as chairman, where inflation remains a central focus.
Lingering disruptions to shipments of oil, fertilizer and other industrial inputs have kept inflation concerns alive at the Fed. The Strait of Hormuz is a critical chokepoint for global energy supplies, and its closure during the conflict has contributed to price volatility. A peace deal would represent a significant de-escalation of geopolitical tensions in the region, potentially stabilizing supply chains that have been under strain for months.
According to Reuters, oil dropped about 4% to a three-month low as markets weighed the implications of the deal. Multiple outlets, including CNBC and the Financial Times, confirmed Brent crude dipped below $80, while The Guardian reported that Iranian oil tankers are "resuming shipping." However, a Reuters report Monday morning noted that ensuring the strait is safe from mines could still take weeks.
Oxford Economics' Ben May cautioned that "sailing through the strait will remain riskier and more costly than before the war," citing risks from underwater mines or a sudden re-escalation. He added that "physical flows are still likely to recover gradually rather than immediately, even if prices respond more quickly." Insurance costs for transiting the strait are expected to stay elevated, meaning the full supply response may lag behind market sentiment.
The counter-argument holds that the threat of mines and the fragile nature of any truce could keep actual shipments constrained for weeks. If the deal falters, prices could rebound sharply, erasing the recent declines. Markets may be overestimating the speed and completeness of a supply recovery, given the logistical challenges still ahead.
(AI note: This brief is based on two verified sources — Axios and Google News coverage of multiple outlets including Reuters, The New York Times, and CNBC. Specific price levels and quotes are taken directly from source text. Any figures not present in sources have been omitted for accuracy.)