US-Iran peace deal: What Hormuz reopening could mean for oil supplies, prices and India

The expected reopening of the Strait of Hormuz following a peace agreement announced by US President Donald Trump could ease concerns over global energy supplies and accelerate a decline in oil prices, offering relief to major importers like India and helping reduce losses for fuel retailers, industry officials and analysts said on Monday.

"The Deal with the Islamic Republic of Iran is now complete. Congratulations to all!" Trump wrote on Truth Social. "I hereby fully authorize the toll free opening of the Strait of Hormuz, and, simultaneously herewith, authorize the immediate removal of the United States Naval blockade."

In a separate post, Trump said the agreement would bring "Peace and Security to the whole Region" and that the Strait would reopen after the signing of the accord on June 19, allowing mine-clearing operations and the resumption of oil shipments.

Brent crude, the global benchmark, fell about 4% to around $84 a barrel after the announcement, extending a retreat from highs of nearly $119 a barrel reached during the disruption.

The Strait of Hormuz, a narrow waterway between Iran and Oman, carries roughly a fifth of global oil consumption and is the main export route for Gulf producers including Saudi Arabia, Iraq, Kuwait, the United Arab Emirates and Qatar.

Disruptions to crude and natural gas shipments through the route since late February had tightened supplies, lifted shipping insurance premiums and freight rates, and fuelled concerns about inflation in energy-importing countries.

A normalisation of traffic through Hormuz would improve India's energy security and reduce import costs.

"State-owned fuel retailers booked losses in one quarter that were equal to the profit they earned in the entire year," an industry official said. "If the agreement holds, energy supplies will ease and so will the prices."

State-owned fuel retailers have continued to incur losses as pump prices remained below import-parity levels.

Industry executives said lower crude prices, reduced freight costs and easing insurance premiums would gradually improve refining margins and reduce under-recoveries for fuel marketing companies.

Analysts also expect the reopening of Hormuz to restore confidence in global energy markets.

Last week, Fitch Ratings said global oil markets were likely to swing back into oversupply in the fourth quarter of 2026, assuming the Strait reopens by the end of July and production resumes quickly.

The ratings agency forecast Brent crude would remain between $100 and $110 a barrel during June and July before retreating as supply recovers. It projected prices could fall to around $70 a barrel by September under that scenario.

"OPEC is likely to produce up to maximum capacity to offset volumes lost due to the closure," Fitch said, noting the producer group's spare capacity stood at about 3.6 million barrels per day before the conflict.

With a peace deal now announced in mid-June and a formal signing expected this week, the decline in prices could occur sooner than previously anticipated.