A preliminary ceasefire agreement between Washington and Tehran to end the maritime blockade has triggered a sharp sell-off in energy benchmarks and raised hopes for an end to the global energy crisis. The accord, set for formal signing this Friday, initiates a 60-day window for technical negotiations over Iran’s nuclear program.
Global market
International oil prices plummeted on news of the deal, with Brent crude falling 5.2 percent to $82.74 a barrel, its lowest level in more than three months, according to international market price assessments. West Texas Intermediate experienced a similar retreat to $80.22, while wholesale natural gas prices dropped by approximately 6 percent. The agreement mandates that Tehran allow toll-free passage for 60 days through the strategic waterway, which typically handles 20 percent of global oil and LNG supply.
However, logistics experts warn that restoring full capacity will be a protracted process. Saul Kavonic, an energy analyst at MST Financial, cautioned that oil markets will remain tight through 2027 as firms work to rebuild depleted inventories and repair damaged infrastructure. Furthermore, the International Maritime Organization’s head, Arsenio Dominguez, noted that transit will remain restricted until approximately 80 naval mines are cleared and security guarantees are established for the 11,000 seafarers currently stranded in the region.
Russia & CIS
Russian forces conducted a massive missile and drone strike on Kyiv, launching 70 missiles and 611 long-range drones in an assault that damaged the 11th-century Dormition Cathedral. Ukraine has responded by intensifying its campaign against Russian energy infrastructure, with homegrown drones successfully hitting an oil facility 700km from the border. These strikes on refineries and storage depots continue to disrupt regional fuel supplies even as global crude prices soften.
In the financial sector, the new Federal Reserve Chairman Kevin Warsh signaled that the reopening of the strait could help ease US inflation, which surged to a three-year high of 4.2 percent in May. Across the Eurozone, industrial production edged up by only 0.1 percent in April, as manufacturers struggled with the “fly in the ointment” of wartime energy costs before the current de-escalation.
Armenia
While no material changes to domestic petrol or natural gas tariffs were reported in Armenia on Tuesday, the republic remains positioned to benefit from the fall of Brent crude prices below $83. Within the EAEU framework, lower global benchmarks typically mitigate inflationary pressure on the refined petroleum products the country imports. The diplomatic thaw between the US and Iran is seen as a vital factor for the stability of Armenia’s southern energy and transport corridors.
Long-term regional stability remains precarious as Israeli Defense Minister Israel Katz announced that Israeli forces would remain in southern Lebanon “indefinitely,” a move that could jeopardize the broader Middle East settlement required for a permanent reopening of the strait. Analysts at the Regional Studies Center in Yerevan previously noted that Armenia’s energy security is increasingly decoupled from Moscow’s influence as Russia faces systemic failures in its own domestic refinery and infrastructure networks.