Oil Falls as Hormuz Deal Ends 100-Day Siege

The United States and Iran reached an agreement Sunday to end fighting and reopen the Strait of Hormuz , more than 100 days after the waterway effectively closed following military strikes on February 28 . President Donald Trump said the strait will reopen Friday after the agreement is formally signed . Oil markets responded immediately. Brent crude traded at $75.20/bbl per barrel on Monday, up +0.51%, according to market data—down sharply from $111.04 in mid-May . WTI stood at $71.50/bbl, up +0.63%. U.S. gasoline prices dropped below $3 per gallon in wholesale markets, though the national retail average remained at $4.26 per gallon as of June 3, according to AAA .

The deal marks a turning point in what has been the most severe Middle East supply chain disruption in modern history . Approximately 15.8 million barrels per day transit the strait —roughly one-fifth of global oil supply and almost 20% of global LNG exports . Gulf states and Iraq have lost approximately $1.1 billion per day in oil revenue while the chokepoint stayed closed—$46 million every hour. The agreement extends the current ceasefire for 60 days, with the goal of negotiating a permanent end to the war . The fate of Iran's nuclear program will be negotiated but remains unresolved for now .

How Fast Can Supply Actually Recover?

Not as fast as markets hope. Trump authorized "the toll free opening of the Strait of Hormuz" and the "immediate removal of the United States Naval blockade," adding: "Ships of the World, start your engines" . But mine clearance, infrastructure damage, and production ramp-up timelines tell a different story. Trump acknowledged that "for purposes of mine removal, oil will flow on both ends again for the Region, and the World" after Friday's signing. Reuters reported that Middle East oil and gas output will take months to fully recover. Parts of the world's biggest LNG plant have sustained missile damage which owner QatarEnergy warned will take up to five years to repair .

An LNG carrier successfully passed through the strait early Monday, the first tanker carrying energy products to clear the chokepoint since the deal was announced , OilPrice.com reported. That's a symbolic milestone, but Maersk, MSC, CMA CGM, and Hapag-Lloyd had all suspended transits, with over 150 tankers anchored outside the strait rather than risk attack . Unwinding that backlog while clearing sea mines will take weeks, not days. A Dallas Fed model estimated that if the closure lasted three quarters, WTI could reach $132 per barrel by year-end . The deal averted that scenario—barely.

Can Electrification Survive Cheap Oil?

Paradoxically, the crisis may have accelerated the very transition it disrupted. A global survey of 1,994 business leaders found that 90% expect their operations to be largely electrified by 2035, while 73% anticipate reaching that stage by 2030 , according to research released Monday by consultancy Public First. The survey was conducted in late April during heightened geopolitical tensions linked to disruptions in the Middle East, and findings suggest that concerns about energy security are accelerating corporate electrification plans .

Among respondents, 79% said recent geopolitical instability has made electrification more urgent for their businesses, while 91% said electrification will improve energy security , E3G reported. However, 72% say government policies are lagging behind, and 62% would consider moving operations if their government did not offer sufficient support to electrify . The Hormuz closure turned energy security from an abstract policy goal into a quarterly earnings risk. Gasoline prices jumped 40.5% in the 12 months ending May, according to the Bureau of Labor Statistics —a visceral reminder that fossil fuel supply chains have single points of failure.

Meanwhile, the infrastructure to support that shift is straining under a different kind of demand. Electricity demand from data centers soared by 17% in 2025, and AI-focused data centers climbed even faster—well outpacing global electricity demand growth of 3% , the International Energy Agency reported in April. Driven by data center investments, the capital expenditure of five large technology companies surged to more than $400 billion in 2025 and is set to increase by a further 75% in 2026 . A January report by Bloom Energy predicts U.S. data centers' total energy demand will nearly double between 2025 and 2028, jumping from 80 to 150 gigawatts—like adding a country with the energy needs of Spain in just three years .

That's where federal financing enters the picture. The Trump administration finalized a $1.6 billion loan to Michigan utility DTE Energy to modernize some 800 miles of natural gas distribution mains and service lines, a move the Energy Department said would result in more than $700 million in cost savings , Bloomberg reported Monday. The Department of Energy's Loan Programs Office also announced a conditional commitment for a loan guarantee of up to $7.17 billion to DTE Electric Company . If finalized, the guarantee to DTE Electric is expected to help finance significant generation and battery storage to power Michigan's future . Utility borrowers must demonstrate that financial benefits from the DOE loan guarantee will be passed on to customers, and LPO's financing comes at a lower interest rate than traditional capital market financing .

What Changed This Week

The world's most critical energy chokepoint went from effectively closed to scheduled reopening in 72 hours. Oil prices that traded above $110 per barrel a month ago fell below $85 on peace deal hopes. U.S. gasoline, which peaked at $4.55 in late May, dropped below $3 in wholesale markets. And a survey of nearly 2,000 global executives revealed that the crisis didn't slow electrification plans—it made them more urgent.

What to Watch

The formal signing ceremony is scheduled for Friday in Switzerland, according to Iranian officials cited by Trading Economics. Mine clearance operations will begin immediately, but full transit resumption depends on how quickly shipping companies deem the route safe. The IEA is expected to release its monthly oil market report later this week, which will provide updated estimates on supply disruption and recovery timelines. And the Federal Reserve's interest rate decision, also due this week, will test whether markets can sustain the current rally in energy stocks amid persistent inflation driven partly by fuel costs. Natural gas futures, which traded at $3.25/MMBtu per MMBtu on Monday (down -2.40%), will be sensitive to any updates on Qatari LNG export capacity and repair schedules.