Skip to content
You can now search across every topic, entity and event.What's new
Iran Conflict 2026
12AUG

Brent falls below its pre-war level

3 min read
14:52UTC

Brent crude fell more than 4% to a $72.64-$73.72 range on 25 June, dropping under its pre-war February level and erasing the war premium that had pushed it past $116 at the height of the IRGC closure.

ConflictDeveloping
Key takeaway

Oil has declared the war over at $72-73, but the minefield and the underwriters have not.

Brent Crude fell to a range of $72.64 to $73.72 on Thursday 25 June, down more than four per cent in a single session and below its pre-war February level 1. Brent is the global oil benchmark that sets the price of roughly two-thirds of internationally traded crude, so its level feeds directly into petrol, diesel and inflation worldwide. The war premium that pushed it past $116 at the height of the IRGC closure is now entirely gone.

The fall extends a steady reversal. Brent traded at $76.14 only the day before , and held near $80.59 while Iran's Islamic Revolutionary Guard Corps (IRGC) still enforced its Hormuz closure . Traders have now priced the benchmark below where it sat before the 28 February strikes, on the same morning the IRGC rejected the Oman corridor and ordered vessels onto Channel 16.

The market is pricing a normalisation the water has not delivered. Mines remain uncleared and need 40 to 50 days of minimum sweeping, foreign-flag commercial flow runs at a fraction of the pre-war 94 transits a day, and no Protection and Indemnity club has reinstated war-risk cover. Traders are treating the corps's threats as bluff and the Korean sailings as the true signal. Because the premium is fully priced out, a single mine strike or one boarding would reprice the entire curve with no buffer to absorb it.

Deep Analysis

In plain English

Oil's global price is set by traders in markets like London, who buy and sell contracts based on what they expect the situation to be in the future. On Thursday, those traders decided the Iran crisis was effectively over and sold their 'war premium', the extra they had been charging because of the danger, pushing the price of oil below where it was before the war started. On the water, nothing has changed. Mines seeded by the IRGC in June remain uncleared. Shipping insurers still will not cover ships crossing the strait. And Iran's military declared that same morning that it would not accept the new safety route. Oil traders are betting everything will be fine; the mines and the insurers are not.

Deep Analysis
Root Causes

Futures markets price the expected outcome of a geopolitical resolution, not the physical state of the supply chain on the day of trading. The Korean transits and the diplomatic language of both Oman and the GCC signalled to algorithmic trading systems that the closure was ending, producing a cascade sell-off of the war premium regardless of whether ships could actually transit with cover.

Chinese buyers received Iranian crude throughout the conflict via the shadow fleet, suppressing the actual supply shortfall below the headline numbers implied by a closed Hormuz. With GL X now authorising Iranian oil sales through 21 August , the partial legalisation of those flows removed residual uncertainty about Chinese purchasing volumes, accelerating the premium sell-off.

A price floor no longer exists: because the premium is fully priced out, a single mine incident or IRGC boarding would reprice from zero premium rather than from a cushioned level. Spot price carries none of the tail-risk cost that physical insurance markets are still pricing at 20 times pre-war rates.

What could happen next?
  • Risk

    Brent with zero war premium has no downside cushion: a single mine strike or IRGC boarding would produce a larger proportional price spike than any event during the conflict, because traders would be repricing from a fully discounted base.

  • Consequence

    Gulf producer state budgets, sized for $80-90 Brent, move into deficit at sustained $72-73, pressuring Saudi Arabia in particular to push OPEC+ for production cuts that would reverse the price decline and contradict their diplomatic stance on Hormuz normalisation.

First Reported In

Update #138 · Three flags over Hormuz, none enforced

Gulf News· 25 Jun 2026
Read original
Different Perspectives
Anwar Gargash, UAE presidential diplomatic adviser
Anwar Gargash, UAE presidential diplomatic adviser
Gargash warned the region cannot stay trapped between "neither war nor peace", naming the stalemate itself as unsustainable for a Gulf state hosting US forces and absorbing the shipping-risk cost without being party to either the strike decisions or the corridor talks.
Shipping and insurance underwriters
Shipping and insurance underwriters
War-risk premiums are still set against an active blockade and a fatal Bab el-Mandeb attack with an unresolved vessel identity. A disabling strike and a diplomatic "advanced" claim pulling in opposite directions gives underwriters no single signal to reprice cover against.
Pakistan and Qatar (Oman corridor mediators)
Pakistan and Qatar (Oman corridor mediators)
Pakistan's defence minister said matters are "shaping up in favor of peace" on Hormuz and a Qatari spokesperson called the Iran-Oman reopening talks advanced. Both are publicly ahead of Tehran's own security council, which has just disowned the deal's significance.
United States Central Command / President Trump
United States Central Command / President Trump
CENTCOM confirmed a helicopter strike disabled a container ship that tried to evade the blockade, and Trump said the US "totally controls" the Strait of Hormuz. Washington is treating evasion of the blockade as grounds for disabling fire rather than the redirection tactic CENTCOM used through July.
Mohsen Rezaei, Iran's Supreme National Security Council
Mohsen Rezaei, Iran's Supreme National Security Council
Rezaei told China's ambassador Hormuz reopens only when the US ends the war and unblocks Iran's funds, and that the Oman transit deal "will have no impact" on that decision. He is drawing a hard line between the technical corridor track and the political settlement his council controls.
Yemen's internationally recognised government and affected communities
Yemen's internationally recognised government and affected communities
SABA reported at least 17 soldiers killed at Saudi-backed camps in eastern Yemen as tanker use of Bab el-Mandeb fell. The fighting adds civilian and supply risks to a route ships use when Hormuz is unsafe.