Iran opens Strait of Hormuz for 60 days, oil retreats from war premium

Iran opened the Strait of Hormuz to commercial shipping for 60 days without fees, Iran's UN representative Ali Bahreini said Monday, removing the supply-disruption premium that had pushed Brent crude above $82 a barrel.

"The market's expectation of the opening of the Strait has been premature," Saul Kavonic, head of energy research at MST Marquee, said. "Iran is likely to continue to find pretexts to stymie flows through the strait, as that remains their only point of leverage into the mid-terms which they are unlikely to let go of."

Brent crude futures traded at $81.11 a barrel, up 54 cents, after touching a high of $82.30 earlier in the session. The number of vessels passing through the waterway reached 71 between Friday and Sunday, data from Kpler showed, still well below the pre-war average of 100 to 130 ships per day. Iran has exported more than 30 million barrels of crude to Asia over the past week, including previously blocked cargoes from Kharg Island, its main oil terminal.

The 60-day window creates a time-bound risk that markets will monitor closely. If negotiations fail to produce a permanent arrangement, the threat of re-escalation could push oil prices higher. The Strait of Hormuz handles about 21% of global oil consumption, making any disruption a direct threat to energy prices worldwide.

A Fragile Ceasefire and Competing Narratives

The announcement came as US Vice President JD Vance met Iranian officials in Switzerland for the first talks under an interim peace deal, while President Donald Trump threatened to resume attacks on Iran. Tehran said the US had failed to meet its commitment to halt fighting in Lebanon, where Israeli strikes killed at least 20 people on Saturday, one day after a ceasefire with Hezbollah took effect.

Iran and Oman reaffirmed their commitment to keeping the strait safe and open for international navigation, according to a joint statement, and agreed to establish a joint team to manage the waterway. The US also waived Iran-related sanctions for 60 days following the talks, while the two sides agreed on a roadmap toward a final deal within the same timeframe.

Oil Supply Dynamics Shift

Over 25 million barrels of Iranian oil passed through the virtual blockade line since last Monday, the head of the National Iranian Oil Company, Hamid Bovard, told state TV. The United Arab Emirates, Kuwait and Iraq have offered more crude to customers in the past week, while Iraq plans to restore production gradually to between 4.2 million and 4.3 million barrels per day.

Oil prices fell more than 8% last week on expectations of more supply from the release of cargoes stranded inside the Gulf and the potential lifting of US sanctions on Iranian oil as part of the deal. The last time a similar geopolitical risk premium unwound — after the 2019 attacks on Saudi Aramco's Abqaiq facility — Brent fell 12% within two weeks as supply returned faster than markets had priced.

The 60-day timeline means shipping companies, insurers and oil traders must now weigh whether to resume normal operations or hold capacity in reserve. A full restart of Gulf LNG exports depends on safe passage and insurer confidence, analysts said, while daily crossings remain roughly 30% to 45% below pre-war levels.

This article is for informational purposes only and does not constitute investment advice.