Oil fell on Monday after U.S. Vice President JD Vance said U.S.-Iran peace talks had made progress and the Strait of Hormuz was open. Brent crude was down $1.74, or 2.16%, at $78.83 a barrel by 1304 GMT. Prices had climbed to $82.30 at the open on President Donald Trump’s threat to restart the war and Tehran’s announcement that it had again closed the waterway. The more-active WTI August contract lost $1.11, or 1.46%, to $74.74 a barrel.
The price move masks a staged recovery in physical supply. Iran’s National Oil Company says 25 million barrels have moved past the U.S. naval blockade in the past week, and ANZ estimates 1 to 2 million barrels per day of supply could be permanently lost.
A Whipsaw Session in Brent
The Monday session reversed the morning’s spike. Brent had opened at $82.30 after Trump’s threat to attack Iran and Tehran’s claim that it had again closed the strait. By 1127 GMT, the contract was down $1.46, or 1.8%, at $79.11 a barrel.
The decline tracked Vance’s statement from Switzerland. The vice president said the U.S. and Iran had made progress in talks and that the strait was open. U.S. West Texas Intermediate crude futures were at $75.87 a barrel, down 73 cents, ahead of the front-month contract’s expiry later on Monday. The more-active August contract lost $1.11, or 1.46%, to $74.74, per the wire on Monday’s Brent drop and Iran’s supply surge.
Both moves came within hours of each other. Trump had threatened to attack Iran over the strait’s closure. Iran said it had reopened the waterway under the Switzerland framework. Energy Secretary Chris Wright said 67 ships passed through the strait in the prior 24 hours, similar to pre-war traffic in oil and oil products. Brent had dropped 5.47% on an earlier Monday after Trump said a U.S.-Iran deal would reopen the strait.
What Came Out of Switzerland
U.S. and Iranian officials wrapped up their first round of talks in Switzerland on Monday. Mediators said the discussions began Sunday under a memorandum of understanding reached last week to extend a tenuous ceasefire from April for at least another 60 days. Vance led the U.S. delegation at the Bürgenstock Resort near Lucerne. Iran’s parliamentary speaker Mohammad Bagher Qalibaf led Iran’s side.
The U.S. Treasury on Monday issued a 60-day license waiving sanctions on Iranian oil, running through Aug. 21. U.S. Secretary of State Marco Rubio is traveling to the UAE, Kuwait, and Bahrain this week to brief Gulf partners on the framework. Technical negotiators continue while Vance returns to Washington. Vance, the U.S. vice president, speaking at the Bürgenstock Resort on Monday, told reporters the talks had created a “good foundation for a successful final deal” to end the war that began at the end of February. He listed four key progress points the two sides had reached:
The final deal is the house. We set the foundation. We haven’t built the house, but we’ve laid a successful foundation to get to a good place for the American people.
- Establishing a mechanism for keeping the Strait of Hormuz open
- Coordination for the ceasefire between Israel and Hezbollah in Lebanon
- An agreement on IAEA inspection
- A process for the technical negotiations that remain
Iran’s Barrels Are Already on the Water
The supply mechanics started moving before the talks concluded. Hamid Bovard, the head of Iran’s National Oil Company, told state TV on Sunday that more than 25 million barrels of Iranian oil had passed through the “virtual blockade” line since the previous Monday.
Iranian Foreign Minister Abbas Araqchi said his country had secured waivers for oil and petrochemical exports, the release of some frozen assets, and the launch of a reconstruction and development plan for Iran. Giovanni Staunovo, an analyst at UBS, said Iran had resumed exports of oil blocked earlier this month due to the U.S. naval blockade. Staunovo called the release of those barrels “additional supply for the market.”
The Treasury license runs alongside offers from other Gulf producers. The United Arab Emirates, Kuwait, and Iraq have offered more oil to customers in the past week. Ship-tracking data shows two crude tankers with just under 2 million barrels of oil sailed through the Strait of Hormuz on Monday, in a sign that traffic was picking up after weaker flows on Sunday over concerns about passage through the waterway. The full pipeline of supply returning to the market is laid out below.
| Source | Volume | Status |
|---|---|---|
| Iran (NIOC head Bovard) | 25 million barrels past blockade | Since last Monday |
| Iraq (oil ministry) | 4.2 to 4.3 million bpd production target | Gradual restoration |
| ANZ forecast, phase 1 | 2 to 3 million bpd | First four weeks |
| ANZ forecast, phase 2 | 2 to 3.5 million bpd | Q3 2026, subject to stability |
| ANZ, structural loss | 1 to 2 million bpd | Permanent or semi-permanent |
Iraq’s Plan to Reopen Southern Fields
Iraq’s oil ministry is laying out its own restoration plan. Deputy Oil Minister Nasser Aziz said Sunday that Baghdad aims to gradually raise output to between 4.2-4.3 million bpd. The target focuses on restoring southern fields whose output declined during the war and the closure of the strait. Iraq ships about 95% of its crude through Hormuz. Aziz said the ministry also aims to increase exports to around 3.5 million barrels per day.
The scale of Iraq’s losses sets the bar. An economic observatory cited by Iraqi outlet Shafaq News estimated Iraq had lost around 350 million barrels of exports since the closure of the strait on Feb. 28, equivalent to roughly $37.7 billion in lost revenue. Per-month losses ran at 84.4 million barrels in March, 93.1 million in April, and 92.8 million in May, with June so far down about 79.6 million barrels from pre-war levels.
ANZ Maps a Three-Phase Recovery
ANZ, the Australia and New Zealand banking group, laid out a phased recovery profile in a Monday note. The bank expects around 2 million to 3 million barrels per day to be restored in the first four weeks. That phase covers shipping logistics, not production restoration. Separately, OPEC+ has added a smaller increment through its July quota hike.
The supply restart runs deeper in the third quarter. ANZ said a further 2 million to 3.5 million barrels per day could be recoverable in the third quarter of 2026, subject to stability.
The recovery will not be complete. ANZ estimates that 1 to 2 million bpd of supply could be permanently or semi-permanently lost. That structural loss is on top of the conditional Q3 recovery.
The bank spelled out the sequencing: “Early gains will be driven by logistics (shipping) rather than production,” ANZ wrote. “Later gains will depend on upstream and refinery recovery. Full restoration is unlikely this year.” The same note frames the price move as a logistics-driven reset, not a return to pre-war supply.
By the numbers:
- $78.83 a barrel: Brent by 1304 GMT, down $1.74 or 2.16% from a morning peak of $82.30
- $74.74 a barrel: WTI August contract, down $1.11 or 1.46%
- 25 million barrels: Iranian oil past the virtual blockade since last Monday, per NIOC
- 67 ships: through the Strait of Hormuz in 24 hours, per Energy Secretary Wright
- 4.2-4.3 million bpd: Iraq’s production target
Where the Ceasefire Could Still Crack
The same Trump threats that drove Monday’s morning spike also exposed how thin the framework is. Vance said Iran’s negotiators “did threaten to walk out” on the talks over Trump’s social media posts criticizing Iran. The vice president defended the posts as a response to Iranian “trash talk.”
The regional backdrop adds its own pressure. Israeli strikes in Lebanon killed at least 20 people on Saturday, Lebanon’s state news agency NNA reported, one day after a ceasefire with Hezbollah took effect. Vance listed coordination for that ceasefire as one of the four progress points. The framework is built on the ceasefire holding. ANZ’s Monday note left the structural verdict plain: “Full restoration is unlikely this year.”
Disclaimer: This article reports on commodity markets and geopolitics. Figures are accurate as of publication. It is not financial advice; consult a qualified professional before trading decisions.
