Crude Oil Plummets 9% This Week as Hormuz Strait Reopening Looms - Blockonomi
by Trader Edge · BlockonomiTLDR
Table of Contents
- Brent crude dropped beneath $83 per barrel Tuesday, tracking toward its weakest weekly performance this year
- Washington and Tehran plan to sign a Strait of Hormuz reopening accord in Switzerland this Friday
- Goldman Sachs slashed its fourth-quarter Brent projection to $80, a $10 reduction from prior estimates
- Morgan Stanley similarly trimmed forecasts, now projecting Dated Brent at $90 average for third quarter
- Strategic Petroleum Reserve data from Monday revealed stocks at their lowest point since 1983
Crude markets extended their downturn for a fourth consecutive session Tuesday following confirmation that Washington and Tehran have reached terms to reopen the Strait of Hormuz, fueling anticipation of a substantial supply increase. Both Brent and West Texas Intermediate benchmarks are experiencing their steepest weekly decline in 2026.
Brent slipped under the $83 threshold during morning European session activity, with WTI hovering around $81. Week-to-date losses for both contracts have reached approximately 9%.
The bilateral arrangement between the United States and Iran awaits formal signing in Switzerland later this week. Market participants anticipate the accord will restore Persian Gulf crude shipments through the critical waterway, which handles approximately one-fifth of global oil supply.
President Donald Trump confirmed during the G7 gathering in France that passage would resume Friday. “Multiple shipping lanes are already operational,” he informed journalists. “Full access will be restored without tolls.”
Wall Street Banks Cut Price Forecasts
Goldman Sachs analysts project Persian Gulf export volumes will recover to pre-conflict levels before August. The investment bank revised its fourth-quarter Brent outlook downward to $80 per barrel from the previous $90 target.
Morgan Stanley similarly adjusted its projections. The firm now anticipates Dated Brent will trade at a $90 average through the July-September period, down from its earlier $100 forecast. Its fourth-quarter estimate dropped $15 to $80.
RBC Capital Markets adopted a more conservative stance. Bank analysts suggested achieving pre-conflict shipping volumes could require several months. “Maximum Hormuz throughput levels may have already passed,” the institution noted.
Market Caution Remains
Complete details of the Washington-Tehran memorandum remain undisclosed. Maritime industry executives and commodity traders emphasize they require comprehensive information before deploying tankers along the route.
Energy sector representatives from Persian Gulf nations reported receiving substantial volumes of inquiries from prospective purchasers regarding crude availability through the strait. However, ambiguity surrounding operational protocols and maritime security continues to temper market enthusiasm.
Brent’s prompt spread—an indicator measuring immediate supply conditions—contracted to 83 cents per barrel. Just thirty days earlier, this metric exceeded $4, illustrating the dramatic sentiment reversal.
The Hormuz closure had already depleted US Strategic Petroleum Reserve holdings to their most diminished state in over four decades, according to Monday’s government data release.
The International Energy Agency plans to publish its monthly market assessment Wednesday, potentially offering additional clarity on supply dynamics.
✨ Limited Time Offer
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants