Oil's price retreat reflects the market's initial relief at Hormuz reopening, but the path back to normal export volumes is likely to be slower than spot prices imply. Iraq's explicit caveat that crude export recovery depends on smooth transit conditions is a material qualifier: any friction at the strait during the 60-day negotiating window would sharply reverse the supply-recovery thesis. The Israel-Lebanon front remains the clearest near-term risk premium, with fresh airstrikes on Thursday casting doubt over whether the broader ceasefire framework can hold long enough for export normalisation to become established.
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Hormuz reopened under a US-Iran interim deal, oil fell, but Iraq's oil minister said export recovery will be gradual and conditional on smooth strait transit.
- Oil tankers transited Hormuz and the US lifted its Iran blockade as an interim deal took effect, with analysts flagging possible export normalisation over coming months
- Iraq's oil minister said fields are ready to resume production but that the return to previous output levels will be gradual and contingent on unimpeded Hormuz passage
- Khamenei characterised Trump's signing of the deal as an act of desperation and warned that nuclear talks would be difficult, with Iran retaining permit authority over strait traffic during the 60-day negotiating period
- Israeli airstrikes in Lebanon continued despite the deal's call for permanent termination of that conflict, with Vance warning Israel against alienating its sole remaining major ally
Oil prices fell near their lowest point since the conflict began as tankers moved through the Strait of Hormuz on Thursday following the entry into force of a US-Iran interim agreement, but the market's relief may be running ahead of the physical reality.
Iraq's oil minister provided the clearest near-term framework for what supply recovery actually looks like: gradual, sequenced, and explicitly conditional on the strait remaining open without disruption. Fields are ready, Baghdad said, but exports will rebuild incrementally, not snap back. That caveat matters for a market that has priced in a relatively clean resolution.
The broader diplomatic picture is considerably messier. Iran's supreme leader framed the agreement as a product of American weakness rather than negotiated compromise, and signalled that the 60-day nuclear talks would be contentious. Tehran also made clear it intends to manage strait traffic through a permit system during that window, preserving operational leverage even as it forgoes fees. Meanwhile Israel, excluded from the negotiations, pressed on with strikes in Lebanon and published an expanded occupation map, drawing an unusually sharp public rebuke from Vice President Vance. The deal's call for Lebanon's territorial integrity sits awkwardly alongside Israel's stated intentions.
The supply recovery story is real, but it has a 60-day clock, an unresolved nuclear file, and an active second front. Traders pricing a straight line back to pre-conflict export volumes may find the geometry is more complicated than that.
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Focus on the World Cup, I reckon; on the games, the players, the Messi rather than the mess above.
