Iran's 30-Day Hormuz Pledge Sends Brent Below $87, but Trump Disputes Draft Deal Terms

ICE Brent crude futures settled at $86.71 per barrel on Friday, June 12, down 4.06% on the day. The weekly decline reached roughly 6% as Iran's semiofficial Mehr News Agency published the terms of a 14-point memorandum of understanding that includes a commitment to reopen the Strait of Hormuz within 30 days of signing. CME WTI crude futures settled at $84.29 per barrel on the same day, per Trading Economics, down 3.9%.

Friday's settlement marks the lowest close for both benchmarks since early March 2026, when the Strait of Hormuz was first effectively closed. Brent has fallen 17.9% over the past month, per Trading Economics, even as it remains 16.8% above year-ago levels. The benchmark peaked at approximately $138 per barrel in early April 2026, the highest level since 2022, before declining as diplomatic contacts resumed.

The 14-Point Draft and What It Proposes

The Mehr News Agency draft proposes that Tehran reopen the Strait of Hormuz "with Iranian arrangements" within 30 days of signing. The agreement would require Washington to lift oil sanctions, end its naval blockade, and release Iranian frozen assets. A further 60-day negotiating window would address nuclear issues, full sanctions relief, and Iran's enriched nuclear material. Pakistan, acting as a diplomatic intermediary, separately said "a final, agreed upon text" of a peace deal had been reached.

President Donald Trump on Friday contradicted Iran's account of the deal's contents. He posted that the terms circulating in Iranian state media "have NOTHING to do with the terms that were agreed to, in writing." Trump said a deal could be signed in Europe over the weekend. Geneva has emerged as the most likely venue, ahead of the G7 summit at Evian-les-Bains, France, from June 15 to June 17.

Wright and Wirth Disagree on Persian Gulf Flows

At a Bloomberg Energy Security Executive Briefing in Houston on Friday, U.S. Energy Secretary Chris Wright said roughly 7 million barrels of oil are exiting the Persian Gulf each day with U.S. military assistance. Wright described the figure as "a rough estimate" representing approximately half of the pre-conflict Hormuz throughput. "Ultimately, we will restore the flows with or without [Iran]," Wright said. Chevron chief executive Mike Wirth, speaking at the same event, disputed the number: "Our view would be it's probably not quite that much."

Wirth added that vessels move "typically with their transponders off, typically at night." Dan Pickering, founder of Pickering Energy Partners, warned that even if Wright's figure is correct, another 7 million bpd remains stranded in the Persian Gulf. He cautioned that larger price spikes are possible by summer's end if flows fail to normalize.

EIA Forecast vs. Friday's Market Price

The EIA's June 9 Short-Term Energy Outlook forecast Brent averaging $105 per barrel for June and July 2026, assuming the Strait of Hormuz remains effectively closed in the near term. Published just three days before Friday's settlement, that release now sits $18.29 per barrel above the actual close. For 2027, EIA projects Brent will average $79 per barrel once Middle Eastern production recovers and Hormuz flows normalize. That $26 spread between the closed-Hormuz and open-Hormuz scenarios represents the market's crude peace dividend.

At Friday's $86.71 close, Brent has already captured roughly $18 of that $26 spread, equivalent to pricing in approximately 70% of the full peace dividend. That implies the market assigns roughly 70% weight to Hormuz reopening within the next three months, or prices in a partial reopening restoring a similar fraction of pre-conflict flows. Middle Eastern producers cut output by more than 11 million barrels per day compared with pre-conflict levels, per EIA. Even with the U.S. military rerouting an estimated 7 million bpd, a gross supply shortfall of at least 4 million bpd would remain under Wright's own numbers.

US Export Surge and the Road Back

U.S. crude and petroleum product net exports set a record 5.8 million barrels per day in April, per EIA, as American producers captured market share from stranded Middle Eastern exporters. The EIA forecasts average U.S. net exports of 4.2 million barrels per day for all of 2026, up from 2.8 million bpd in 2025, a 50% year-over-year increase. OECD oil inventories have fallen to their lowest level since 2003, according to the EIA STEO, as global stock draws average 6.3 million barrels per day in the second quarter. EIA Administrator Tristan Abbey said in the June 9 STEO that any return to pre-conflict market conditions "must account for the partial restructuring of the global oil market that has already occurred."