WTI crude rises 0.6% to $76.54 as Hormuz recovery faces delays

Oil prices edged higher in Asian trade as traders weighed the US-Iran peace deal against HSBC's warning that Strait of Hormuz flows won't normalize before late July.

WTI crude rose 0.6% to $76.54 a barrel in early Asian trading Wednesday, snapping four consecutive sessions of losses as traders balanced the US-Iran memorandum of understanding against a prolonged timeline for restoring flows through the strategic waterway.

"While the memorandum of understanding is clearly positive, we need to see evidence that it holds," analysts at HSBC Global Investment Research said in a report.

Even if navigation resumes, normalizing traffic through the Strait of Hormuz will take time, HSBC said. Under an optimistic scenario, commercial traffic through the strait won't meaningfully normalize before late July, with near-full restoration of oil output delayed until end-September. Brent crude fell 1.7% to $81.73 a barrel Tuesday, while WTI settled at $76.54 after dropping 1.9% earlier in the session.

The timeline gap between the diplomatic breakthrough and actual supply restoration leaves oil markets in a precarious position. If the MOU holds and flows recover faster than expected, prices could face further downside. Any breakdown in the agreement, however, could trigger a sharp spike, with Goldman Sachs and Morgan Stanley already cutting their oil-price forecasts on expectations of a quicker Gulf supply recovery.

The US and Iran are set to sign the memorandum of understanding on June 19 in Switzerland, marking the first major step toward ending a nearly four-month conflict that roiled global energy markets. President Donald Trump announced the deal Sunday, declaring the Strait of Hormuz would reopen and authorizing the immediate removal of the US naval blockade.

Shipping Operators Remain Cautious

Despite the political breakthrough, shipping operators are taking a wait-and-see approach. Mitsui OSK Lines, one of the world's largest tanker operators, said it will not send vessels through the strait until the deal proves itself in practice. Shipping data show only a fraction of normal tanker volumes are moving through the waterway, and clearing mines could take weeks. Senior US officials said ship traffic should pick up significantly within one to two weeks, provided Iran does not charge tolls or fees to passing vessels — a point Tehran has pushed back on, asserting its legal right to collect maritime service fees.

Wall Street Cuts Forecasts on Supply Outlook

Major banks are already adjusting their oil-price outlooks. Goldman Sachs and Morgan Stanley cut their forecasts, with Persian Gulf flows expected to recover to prewar levels sooner than anticipated. The last time oil prices broke below $80 a barrel was before the Iran war began in March. Iran can begin selling oil as soon as the MOU is signed, a senior US official said, with provisions covering insurance, banking and transportation services. A $300 billion reconstruction fund has been established, with about half already committed across five regions, according to Reuters.

The agreement allows Iran to immediately resume oil exports, potentially adding significant supply to a market that has been starved of Persian Gulf crude for months. The International Energy Agency estimates the conflict removed roughly 3 million barrels a day of supply from global markets at its peak.

This article is for informational purposes only and does not constitute investment advice.