Quote on Crude oil by Swarnendu Bhushan, Research Analyst, PL Capital
Below the Quote on Mr. Swarnendu Bhushan, Head - Research Analyst, PL Capital
After 3.5 months of one of the worst energy shocks in recent history, there's finally a ray of hope. On 14th June’26, the US and Iran announced an agreement to end the conflict and restore shipping through the Strait of Hormuz. As a result, Brent crude dropped ~4.1% to ~USD 83/bbl, its lowest level since March'26. As we speak, based on media reports, one Indian LNG tanker has passed through the Strait. The formal signing is expected to take place on 19th Jun'26 in Switzerland. Concrete details of the agreement are still awaited.
Where Things Stand Now
At USD83/bbl, crude is still up ~15% vs pre-war levels and ~38% YTD. The geopolitical premium is deflating, but the structural damage isn't done yet.
Getting oil flowing again is not the same as flipping a switch, hundreds of tankers are still stuck at the Strait. Shipowners, insurers and vessel crews will need to be convinced that it is safe to transit through the Strait of Hormuz before full-scale maritime traffic can resume. War risk insurance premiums, which spiked to multi-decade highs during the conflict, won't normalise overnight regardless of what any MOU says. Repairing the damaged refining infrastructure will also take months. Critically, the negotiations over Iran's nuclear program remain a key uncertainty. The continued presence of Israeli forces in parts of Lebanon also adds another layer of geopolitical uncertainty. The framework still needs to be formally signed and verified before political uncertainty fully clears.
PL View
Once the final agreement is signed and the Strait of Hormuz is confirmed safe for tanker movements, a gradual normalisation of supply flows is expected, putting further downward pressure on crude prices as the geopolitical risk premium fully unwinds. However, the decline in prices may be limited. Countries that utilised their Strategic Petroleum Reserves (SPRs) and inventories during the conflict are likely to begin replenishing stocks, which could provide support to crude prices. The rebuilding of inventories is expected to create additional demand in the market, potentially offsetting some of the near-term supply-driven pressure and supporting prices.
Above views are of the author and not of the website kindly read disclaimer
