Topic 5: CRUDE: ENERGY MIST

Crude oil witnessed one of its sharpest reversals of 2026, transitioning from conflict-driven highs at the beginning of June to near pre-war levels by month-end. Brent crude, which started the month around US$95 per barrel amid heightened geopolitical tensions, fell more than 20% to the low-US$70s, while WTI slipped below US$70 for the first time since late February. The decline marked a dramatic unwinding of the risk premium that had built up following the Israel-US-Iran conflict, which began on February 28 and disrupted global energy markets. The conflict had pushed Brent above US$100 within days and to a peak of nearly US$126 by the end of April, as the effective closure of the Strait of Hormuz disrupted an estimated 14 million barrels of daily oil supply. Prices remained elevated through May, with fears of prolonged supply disruptions keeping markets on edge. Early June saw continued volatility as military exchanges between the US and Iran sustained concerns over regional stability. The turning point came in mid-June when reports emerged of a US-Iran memorandum of understanding aimed at reopening the Strait of Hormuz in exchange for easing sanctions and lifting restrictions on Iranian ports. Markets responded swiftly, with Brent losing nearly US$17 a barrel within days as investors anticipated a normalization of Middle East oil flows. By late June, tanker traffic through Hormuz had begun recovering, reinforcing expectations of improved supply. The correction was further supported by weaker global demand prospects, rising supply expectations from OPEC+ and the potential return of Iranian exports. Although sporadic attacks on vessels and delays in peace negotiations caused temporary price fluctuations, markets increasingly viewed these events as isolated rather than signs of renewed escalation. By the end of June, crude had largely shed its geopolitical premium, with prices once again being driven by underlying supply-demand fundamentals rather than conflict, setting a more balanced outlook for the second half of 2026.



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