Q2 2026 Oil Price Collapse: How the Strait of Hormuz Ceasefire Triggered a 48% Plunge in Crude

Brent crude oil suffered one of its steepest quarterly collapses on record in Q2 2026, plunging from a war-driven peak of $138 per barrel to below $72 by the end of June. The primary catalyst was a diplomatic breakthrough between the United States and Iran that began to unwind the massive supply-disruption premium embedded in oil prices since the conflict erupted in late February.

Here is a fact-checked breakdown of the price decline, covering each major factor.

Scale of the Price Decline

Brent crude experienced one of its most dramatic quarterly drops since the COVID-19 pandemic.

• April peak: Brent hit an intraday high of $138/bbl on April 7, 2026, as the US-Israel conflict with Iran escalated and the Strait of Hormuz was effectively closed to commercial shipping . The April monthly average was approximately $117/bbl .
• End of Q2: By June 30, Brent settled at $72.92/bbl, and by July 1 it fell to $71.57/bbl — the lowest since before the war began .
• Peak-to-trough decline: Roughly 48% from the April 7 intraday high to the late-June lows.
• Monthly context: Brent dropped about 19% in May alone (the worst monthly loss since the onset of COVID-19), and prices fell nearly 30% in the two weeks following the mid-June ceasefire announcement . For the quarter, Brent was down roughly 38% after soaring 94% in Q1 .

Ceasefire and Reopening of the Strait of Hormuz

The primary catalyst for the price collapse was the diplomatic breakthrough between the US and Iran, which removed the core war-risk premium from oil prices.

• On June 14, US President Donald Trump and Iran's deputy foreign minister announced an agreement to cease hostilities and allow the resumption of shipping through the Strait of Hormuz. Brent fell over 4% that day .
• On June 17, the two sides signed a formal Memorandum of Understanding (MOU) committing to restore commercial shipping through the strait as part of a broader ceasefire and de-escalation framework .
• Talks continued through late June, with the US and Iran holding negotiations in Doha, Qatar, sustaining the downward pressure on prices through the end of Q2 .

Recovery in Shipping Traffic

Tanker transits through the Strait of Hormuz increased meaningfully after the agreement but remained well below pre-war levels.

• Tanker traffic, which collapsed to a fraction of normal levels during the conflict, began recovering in mid-June . Before the war began on February 28, around 90 to 110 vessels passed through the strait daily, but flows collapsed by more than 90% at the height of the disruption .
• By June 18, over 20 oil tankers had navigated the strait since the interim deal took effect, with traffic reaching its highest level since early June .
• By the weekend of June 25, transits had increased further to 93 vessels over the weekend, per CNBC .
• However, the waterway remains "half-open" and only partially navigable. On June 30, Reuters described the strait as "only partially navigable and politically contested" . The New York Times similarly reported on June 20 that traffic was "significantly lower than pre-war levels" and remains unpredictable .

Lingering Risks: Intermittent Strikes and IMO Safety Incidents

Despite the ceasefire, security in the Strait of Hormuz remains fragile. Several violent incidents occurred even as the diplomatic process advanced.

• June 11: Three Indian seafarers were killed in an attack on an oil tanker near the Strait of Hormuz .
• June 25: Iran struck a Singaporean-flagged cargo ship with an explosive drone hours after warning vessels they must use Iran-controlled routes or face consequences .
• June 26: A projectile hit a vessel off Oman, prompting the UN's International Maritime Organization (IMO) to pause its evacuation plan for more than 11,000 stranded sailors. The IMO had evacuated about 2,500 seafarers before the attack froze the operation .
• June 27: Iranian forces launched at least four attack drones at commercial shipping in the region, striking the container ship M/V Ever Lovely and damaging its bridge .

The New York Times reported on June 27 that renewed strikes threatened to set back the shipping recovery, and analysts noted that intermittent attacks keep uncertainty high for shipowners and insurers .

Revised Analyst Price Forecasts

Major financial institutions cut their oil price forecasts sharply as the supply-disruption premium evaporated.

• J.P. Morgan (June 24): Cut its H2 2026 Brent forecast to an average of $86/bbl for Q3 and Q4, citing diminished commercial inventory draws and lower-than-expected oil demand .
• EIA (June 30 STEO): The Energy Information Administration revised its outlook to reflect the assumption that the Strait of Hormuz would gradually reopen, significantly lowering its Brent price projections compared to the May STEO .
• By July 1, Brent was trading below most revised analyst forecasts, with spot Brent at $71.57 and WTI at $69.50 — both in technically oversold territory for 11–13 consecutive days .

Key Takeaway

The Q2 2026 oil price collapse was driven by the removal of a massive war-risk premium following the US-Iran ceasefire and the phased reopening of the Strait of Hormuz. While shipping traffic has recovered partially, intermittent drone and missile attacks continue to threaten full normalization, and the IMO has had to pause its maritime evacuation operation. Analysts have slashed their H2 forecasts, but spot prices have already fallen below most revised estimates as of end of Q2.