Brent Crude Settles at $79.58 as Iran Hormuz Deal Erases a $33 Per Barrel Supply Premium

Brent crude oil settled at $79.58 per barrel on Thursday, June 18, according to OilPrice.com data as of mid-afternoon. West Texas Intermediate settled at $75.66 per barrel for the same session. Both benchmarks extended a 29% decline from the one-month peak of $112.93 per barrel reached in mid-May, driven by progress in US-Iran peace negotiations that markets believe will reopen the Strait of Hormuz to commercial traffic.

Iran Deal Terms and the 60-Day Hormuz Window

President Trump signed a 14-point interim agreement with Iran at the G7 summit in France on June 16, with the formal treaty text scheduled for signing in Geneva on June 19, according to Energy Connects. Article 5 of the agreement commits Iran to make arrangements using its best efforts for the safe passage of commercial vessels with no charge, for 60 days only. Markets interpreted that language as the start of effective Hormuz reopening, removing a risk premium that had accumulated for weeks.

The agreement does not activate sanctions relief, release frozen assets, or immediately return Iranian crude export volumes to market. No Iranian oil enters the global market simply because the memorandum was signed. Demining operations are scheduled to begin within 30 days of the signing under the deal's terms.

Goldman Sachs Projects Partial Recovery, Not Full Restoration

Approximately 20% of the world's crude oil supply transits the Strait of Hormuz, according to the International Chamber of Shipping. The ICS estimated that nearly 600 ships and 20,000 seafarers remained stranded in Gulf waters at the time of signing. Goldman Sachs projected that Gulf crude exports will normalise by the end of July, but at only 70% of pre-war throughput levels.

Applied to the roughly 20 million barrels per day that transited Hormuz before the conflict, the Goldman Sachs projection implies 14 million barrels per day restored by the end of July. That leaves an estimated 6 million barrels per day still offline, providing a floor beneath which prices are unlikely to fall sharply. The bank noted that producers had been redirecting shipments through alternative export routes, slowing any full supply normalisation.

The EIA Short-Term Energy Outlook, released in early June before the interim agreement was signed, had forecast Brent crude averaging $105 per barrel in June and July based on tight physical inventory data. Oil Authority calculated the gap between the EIA pre-deal baseline of $105 and Goldman Sachs's current floor of $78 at $27 per barrel. That figure represents the Hormuz geopolitical risk premium at its peak, now being removed from market pricing.

Large Inventory Draw Cannot Offset the Supply Signal

The American Petroleum Institute estimated that US crude inventories fell by 8.33 million barrels in the week ending June 12, far exceeding analyst expectations. Crude stocks at Cushing, Oklahoma, the delivery and pricing hub for WTI futures, dropped to approximately 20 million barrels, the lowest level in several years. Under a normal supply backdrop, a drawdown of that size would push prices sharply higher.

Thursday's price action illustrates competing forces in the physical versus paper market. The Iran deal's forward supply expectations overwhelmed a physically tight spot market, pulling both benchmarks lower despite the large drawdown. The Federal Reserve's signal of a possible interest rate increase in 2026 added a bearish economic overlay, raising demand-growth concerns among traders.

WCS Differential Implies $59.36 Per Barrel for Canadian Heavy Crude

Western Canadian Select for June delivery in Hardisty, Alberta, settled at a $16.30 per barrel discount to WTI as of May 2026 market data, according to the Canadian Association of Petroleum Producers. At Thursday's WTI settlement of $75.66 per barrel, that differential implies WCS at $59.36 per barrel. Canadian heavy crude producers with Trans Mountain or Enbridge mainline access to US Gulf Coast refineries face a narrower realized discount than those relying on rail or western-only routing.