U.S. crude oil prices have given back nearly all of the war premium built up since late February, returning to levels last seen before the conflict that briefly threatened to choke off a fifth of the world's oil supply.
West Texas Intermediate (WTI), the U.S. benchmark, fell below $71 a barrel on June 24 — down sharply on the day and roughly 25% over the month — its lowest since before military action against Iran began in late February, according to CNBC. Brent, the international benchmark, slipped to around its weakest in nearly three months. The two grades usually move together; WTI typically trades a few dollars below Brent because of where each is delivered.
What 'pre-conflict' means
Before military action against Iran, WTI sat in the low $70s. Iran's threat to close the Strait of Hormuz — the narrow waterway between Iran and Oman through which nearly 20% of global oil supply flows — drove prices sharply higher, with the U.S. Energy Information Administration (EIA) at one point lifting its 2026 Brent forecast to about $96 a barrel and warning of an effective closure of the strait.
The 'risk premium' deflates
A risk premium is the extra price traders pay to insure against a feared disruption; as the disruption looks less likely, that premium drains away. Several developments sped the unwind: Washington granted Iran a 60-day license to sell oil internationally, and President Trump said tankers transiting the strait would face no tolls or insurance charges, signaling safer passage.
Physical flows are normalizing
Beyond futures prices, traders watch the physical market — actual barrels loading onto ships. Here the evidence is concrete: Iran shipped more than 30 million barrels over the past week, and the International Energy Agency reported United Arab Emirates exports rebounded to nearly 85% of pre-conflict levels. The International Maritime Organization said more than 11,000 seafarers stranded in the Persian Gulf had begun exiting after safety guarantees.
The caveat: it could reverse
Normalization is not complete. Phillips 66 Chief Executive Mark Lashier cautioned that 90 million to 100 million barrels of crude remain trapped in the strait and will clear only slowly. "It's going to be a long drawn out paced process," he said. The EIA, for its part, assumes shipments take several months to ramp back to pre-conflict traffic by early 2027.
On the broader backdrop, OPEC trimmed its 2026 global demand-growth estimate and the EIA expects demand to soften through the year — a setup that limits how high prices can climb once fear recedes. These are scenarios, not forecasts: a breakdown in talks, a fresh flare-up, or slower-than-expected tank drawdowns could re-inflate the premium as quickly as it deflated. This article is for information only and is not investment advice.
