US-Iran deal frees 85 million barrels, Brent eases to $79.42

Brent crude futures dropped 43 cents, or 0.54%, to $79.42 a barrel by 0328 GMT, while US West Texas Intermediate (WTI) fell 17 cents to $76.43. Both benchmarks touched their lowest levels since early March on Thursday, after several tankers, including three Saudi-flagged vessels carrying 6 million barrels of crude, passed through the strait shortly after the Iranian and US presidents signed an interim deal to end their conflict. The more actively traded August WTI contract eased 30 cents to $75.55.

The move came as the supply picture loosened. Analysts cited by Reuters expect the agreement to free up more than 85 million barrels previously stranded in the Middle East Gulf, with the deal also involving the lifting of US sanctions on Iranian oil. The BBC reported that shares rose alongside the oil decline as markets priced in a de-escalation. Before the war, roughly 20% of the world's oil and liquefied natural gas (LNG) passed through the Strait of Hormuz, so its reopening removes a significant risk premium from the curve.

The chart below shows Brent over recent months, against which the easing following the strait's reopening can be read.

What this means for UK buyers

For UK commercial energy buyers, the read-across runs through gas. The Strait of Hormuz is a primary route for LNG cargoes, and the UK draws on global LNG to balance its system. A calmer transit picture tends to soften forward gas, which in turn feeds power. If you are weighing a renewal, the easing premium may widen the window to lock, though traders remain cautious.

Watch these developments shaping the curve:

• Tanker traffic through the Strait of Hormuz returning to pre-war volumes
• Kuwait Petroleum Corp lifting all force majeure notices issued during the conflict
• Iraqi oilfields resuming output toward previous levels
• The pace of any US sanctions relief on Iranian crude
• Stability of the US-Iran agreement amid wider regional conflict

The Financial Times noted that the reopening reverses much of the wartime spike, but the recovery is not guaranteed. Tim Waterer of KCM said traders are still waiting for 'concrete evidence that tanker traffic through the Strait of Hormuz is truly returning to normal' before committing further. Israel's ongoing conflict with Hezbollah in Lebanon, and the cancellation of US Vice President JD Vance's planned meeting with Iranian negotiators, both cloud the outlook.

What to watch next: confirmation that transit volumes hold through the coming weeks. If the agreement stays intact and Gulf producers ramp exports, the stranded barrels reach the market and forward gas softens further. If the truce frays, the risk premium returns quickly, and any renewal advantage narrows just as fast.