Brent crude closed June at approximately $74 a barrel, ending the second quarter down more than 30 percent. It was the largest quarterly drop since 2020. On February 27, the day before the United States and Israel launched strikes against Iran that killed Supreme Leader Ali Khamenei, Brent traded at $72. The war sent oil above $120. The ceasefire sent it back. The round trip took four months and two dollars.
The Premium
Iran began blocking the Strait of Hormuz within hours of the February 28 airstrikes. The IRGC issued passage warnings, boarded merchant vessels, and began laying sea mines. The formal closure came on March 4. The strait carries approximately 20 million barrels of oil per day, roughly 20 percent of global petroleum consumption and 34 percent of all seaborne crude trade. Its closure had been the subject of strategic war games and energy policy simulations for decades. When it actually happened, Brent surged nearly $50 a barrel, touching $121 in late April.
An initial ceasefire on April 7 was immediately disputed. By early June, Brent had settled near $101, still carrying a $29 war premium. Then the US and Iranian presidents signed a memorandum of understanding on June 17 establishing a 60-day negotiation window. Israel was not a signatory. In the final two weeks of June, Brent dropped from $101 to $74. The market treated a preliminary accord between two of three belligerents as permission to remove the remaining premium entirely.
Iran tested that conviction immediately. On June 20, it declared the strait closed again, citing Israeli strikes in Lebanon as a ceasefire violation. On June 25, an IRGC drone struck the container ship Ever Lovely as it transited the Omani coastal corridor, the only JMIC-designated alternative to the mined central channel. Two days later, on the same morning the Joint Maritime Information Center widened that corridor to allow two-way traffic, another drone struck the crude tanker Kiku on the same route. Oil fell anyway.
The Foundation
Beneath the war premium, the oil market was already drowning. Before the first strike, the IEA's December 2025 Oil Market Report had forecast a 2026 global surplus of 3.84 million barrels per day, roughly 4 percent of total world demand. The war temporarily inverted that math. By May, the Hormuz closure had turned the surplus into an estimated deficit of 1.78 million barrels per day. But the underlying supply picture never changed. Non-OPEC+ producers led by the United States, Brazil, Canada, Guyana, and Argentina were adding approximately 1.2 million barrels per day in new supply. Demand growth had slowed to 860,000 barrels per day, well below the historical average, dragged down by electric vehicle adoption and improving fuel efficiency.
OPEC+ was already cutting. The cartel held roughly 3.6 million barrels per day of production offline, about 3 percent of global consumption, and it was losing discipline. In May, the group announced a 188,000-barrel-per-day output increase for June despite the surplus. The cuts were not defending price. They were slowing a descent that predated the war.
The strait closure masked all of this. A market structurally oversupplied by nearly 4 million barrels a day looked tight because 20 million barrels of daily transit capacity had been removed. The nearly $50 war premium at its April peak was not measuring supply disruption. It was measuring the distance between the market's fundamental value and the price fear demanded.
The Divergence
The oil market and the shipping market are looking at the same strait and pricing opposite conclusions.
Brent crude returned to within two dollars of its pre-war level. The commodity market has decided the conflict is functionally over and the oversupply dominant. But the ships passing through that strait are paying for a different reality. War risk insurance premiums, which averaged 0.25 percent of vessel value before February, have surged to as high as 10 percent. A single transit for a large tanker that once cost $40,000 to insure now costs $600,000 to $1.2 million. Hapag-Lloyd imposed war risk surcharges of $1,500 per container unit on Gulf-linked shipping lanes beginning in March. More than 1,500 vessels of all types remain trapped in the Arabian Gulf.
The freight market is not irrational. The central channel is mined. Iran has struck two commercial vessels on the Omani corridor in a single week. The 60-day negotiation window covers Iran's nuclear program, which neither side has moved on. The physical danger is real.
The oil market is not irrational either. It has a pre-war surplus of nearly 4 million barrels a day reasserting itself. It has demand growth running at half the historical rate. It has OPEC+ cutting 3 percent of global supply and still losing ground. The war created a price floor that masked a structural bear market. Peace did not crash oil. It removed the last excuse for oil to be expensive.
The Signal
The divergence between the cost of moving oil and the cost of oil itself reveals what the war actually changed. Not the supply-demand balance. OPEC+ was oversupplied before the strait closed, and it will be again. EV penetration was accelerating before the war. Shale output was rising. Brazilian pre-salt was ramping. Guyana was adding capacity.
What the war changed was attention. For four months, every oil trader watched the Strait of Hormuz instead of watching the surplus. The nearly $50 premium at its peak was the market's way of not looking at the fundamentals. When the ceasefire forced the gaze back, the fundamentals had not improved. They had deteriorated.
Brent crude started 2026 at $61. It began the war at $72. It is ending Q2 at $74. The round trip includes a $50 peak premium and a 30 percent quarterly decline and delivers a price two dollars above where it was when there was no war at all. The freight market, which must price the physical risk of sailing through a contested waterway, still sees danger. The oil market, which must price nearly 4 million barrels a day of pre-war surplus reasserting itself, sees math. The strait was never the story. The surplus was.