The US and Iran have announced a preliminary agreement to end their war, raising hopes for an end to the global energy crisis.

The United States and Iran announced a preliminary agreement to end their war on Sunday. The deal is expected to reopen the Strait of Hormuz, a crucial route for global energy trade. The conflict had caused a significant disruption to global oil supplies since it began on February 28, 2026.

Impact on Oil Prices

The conflict had caused oil prices to rise, but the increase was more moderate than expected, peaking at around $120 a barrel before dropping further after the peace deal was announced. Increased supply from the US and other non-Gulf sources, decreased Chinese demand, and the coordinated release of strategic reserves helped keep the price rise in check.

Global Response to the Crisis

Countries around the world have tapped their domestic inventories to make up for the millions of barrels of oil stranded in the Persian Gulf. China, the world's largest crude importer, has cut imports by four million barrels per day. Oil stocks fell at an average rate of 5.3 million barrels per day between March and May, according to the US Energy Information Administration.

Road to Recovery

Experts caution that it will likely take months for the energy markets to return to pre-conflict normal, even if the deal comes to pass. Restoring traffic through the strait, resolving issues such as insurance, and repairing damaged energy facilities will take time. The damaged oil fields, pipelines, and other infrastructure will need repairs before they can contribute to boosting supply.