Crude markets reversed sharply lower on Monday, with Brent shedding 3.95% to settle at $77.39 a barrel as of 11:44 a.m. ET (1544 GMT), after U.S. Vice President JD Vance pointed to advances in negotiations with Tehran and confirmed that the Strait of Hormuz remained navigable. The shift wiped out an early rally that had pushed Brent as high as $82.30, a level reached after President Donald Trump floated reopening hostilities with Iran and Tehran said it had once more sealed off the waterway.
The day’s $3.18 drop in Brent tracked a broader unwinding of the supply fears that had gripped traders at the open. On the U.S. side, West Texas Intermediate sat at $74.45, off $2.15, with the front-month contract set to expire later in the session. Trading had already migrated toward the August contract, which fell harder in percentage terms, losing $2.49, or 3.28%, to $73.36.
Easing those concerns was fresh evidence that shipping was returning to the strait. Vessel-tracking data showed two tankers carrying close to 2 million barrels passing through on Monday, a pickup from the thinner movement seen a day earlier when uncertainty over safe passage had curbed flows. UBS analyst Giovanni Staunovo noted that Iranian barrels held back earlier in the month under a U.S. naval blockade were now moving again. “The ‘release’ of those barrels is additional supply for the market,” he said.
Washington reinforced that opening on the policy side. The Treasury Department issued a general license clearing the way for sales of Iranian-origin crude, petroleum and petrochemical products through August 21, formally authorizing the exports the same day.
The diplomatic backdrop centered on talks in Switzerland, where senior officials from both governments held an opening round under a memorandum of understanding struck the previous week. That understanding extended a fragile April ceasefire by a minimum of 60 days. According to Foreign Ministry spokesperson Esmaeil Baghaei, speaking to IRNA, Tehran entered Sunday’s session without conceding ground on its nuclear file and took on no fresh obligations.
Supply additions are expected to build well beyond Iran. Producers including the United Arab Emirates, Kuwait and Iraq have widened offers to buyers over the past week, and Iraq intends to lift output in stages toward a band of 4.2 million to 4.3 million barrels per day, its deputy oil minister for upstream affairs said Sunday. ANZ projected that roughly 2 million to 3 million barrels per day could come back online within the first four weeks.
The bank cautioned, however, that the rebound faces real limits. It estimated a further 2 million to 3.5 million bpd might be recovered during the third quarter of 2026 if conditions hold steady, while between 1 million and 2 million bpd risks being lost on a permanent or near-permanent basis. “Early gains will be driven by logistics (shipping) rather than production,” ANZ wrote, adding that “Later gains will depend on upstream and refinery recovery. Full restoration is unlikely this year.”
Even as energy markets calmed, the regional ceasefire showed strain elsewhere. Lebanon’s state news agency NNA reported that Israeli strikes killed no fewer than 20 people on Saturday, coming just a day after a truce with Hezbollah had taken hold.
