The preliminary peace agreement between the United States and Iran could ease pressure on oil and gas markets, reopen the Strait of Hormuz, and reshape global energy trade. However, significant uncertainties remain.
A tentative breakthrough after more than 100 days of conflict
The USA-Iran peace deal could mark a turning point for global energy markets. On June 14, U.S. President Donald Trump announced the framework of a preliminary agreement with Iran, signaling a possible end to more than 100 days of conflict.
The announcement was later confirmed by Iranian officials, while Pakistani Prime Minister Shehbaz Sharif stated that both sides had agreed to an immediate and permanent ceasefire across all fronts, including Lebanon. The formal signing of the agreement is expected to take place in Switzerland on June 19.
Strait of Hormuz reopening lifts market sentiment
A key element of the agreement is the reopening of the Strait of Hormuz, one of the world’s most important energy transit routes.
Energy markets reacted immediately. European natural gas prices have been falling since the first signs of a breakthrough emerged, dropping below €43/MWh on June 15, 2026, their lowest level in five weeks, although still significantly above pre-conflict averages.
Oil prices have also moved lower. Brent crude fell to $83 per barrel, its lowest level in two months, while West Texas Intermediate declined to around $80 per barrel. Energy stocks, which had benefited from the geopolitical crisis, also retreated from recent highs.
Why optimism should remain cautious
Despite the market reaction, significant uncertainties remain. The agreement has yet to be formally signed, and the memorandum does not appear to fully resolve several critical issues, including the long-term security and operational framework governing the Strait of Hormuz.
The European Union has welcomed the prospect of peace while continuing to emphasize the importance of energy diversification.
“Once again, energy dependence has been turned into a weapon,” said European Commission President Ursula von der Leyen. “We must diversify our supply routes and develop alternative export corridors so that we are no longer dependent on the Hormuz bottleneck.”
Oil outlook: a gradual recovery, not an immediate return
Industry analysts believe it will take time before oil production returns to pre-crisis levels of roughly 20 million barrels per day.
The main constraints will be logistical. Export infrastructure must be restarted safely, while upstream production facilities require careful management before full operations can resume. Even after a formal peace agreement, regional tensions may persist, encouraging operators to adopt a cautious approach.
“In this scenario,” Wood Mackenzie wrote, “fields affected by the closure of the Strait could return to 70% of previous production within three months and 90% within six months. Reaching the final one million barrels per day will take considerably longer.”
LNG markets could face a future oversupply
The USA-Iran peace deal is unlikely to trigger an immediate rebound in liquefied natural gas exports.
Under the most optimistic scenario, undamaged LNG facilities could restart operations during July 2026 and gradually return to full capacity by 2027. However, analysts believe the reopening of the Strait of Hormuz could eventually contribute to a substantial increase in global LNG availability.
Wood Mackenzie analysts Massimo Di Odoardo, Alan Gelder, Gavin Thompson, and Pietro Martino argue that the expected global LNG supply expansion remains inevitable, even if delayed until 2028. With new export projects under development worldwide, LNG production capacity could rise by approximately 50% compared with current levels.
Lower gas prices could reshape global demand
The combination of weaker short-term demand and rising LNG supply could create a significant market imbalance.
Analysts expect that LNG cargo cancellations from the United States may become necessary to rebalance markets. Over the longer term, this dynamic could lead to a substantial decline in European gas prices, potentially cutting them by half by 2031 before a moderate recovery between 2030 and 2035.
At the same time, greater LNG availability could restore confidence in global gas markets and support a new phase of demand growth across emerging Asian economies.
