JD Vance expects oil flows from Gulf to return to pre-conflict levels

The world’s most important oil chokepoint is open for business again, and Vice President JD Vance wants everyone to know it. Vance confirmed that Iran has agreed not to impose tolls on oil transiting the Strait of Hormuz, a commitment formalized as part of a memorandum of understanding between Washington and Tehran reached around mid-June 2026.

The announcement matters because roughly a fifth of the world’s seaborne oil supply passes through this narrow corridor between Iran and Oman. When it gets complicated, energy markets feel it immediately and everywhere.

What the deal actually says

The United States agreed to lift its naval blockade on Iranian ports and temporarily waive certain oil sanctions. Iran, in return, committed to keeping the Strait of Hormuz open and toll-free for oil transit.

Daily oil volumes through the strait climbed to between 12.5 million and 16 million barrels during the period following the agreement, according to the research findings. That’s a meaningful recovery from wartime lows, though it still falls short of the roughly 20 million barrels per day that moved through the strait before the conflict began.

Vessel traffic tells a similar story. Total ship passages through the strait were running at around 240 over one recent week, below the pre-war standard of 130 to 150 daily crossings. Oil tankers have been faster to resume operations than other vessel types.

What happened to oil prices

WTI and Brent crude both fell to approximately $70 to $73 per barrel by late June 2026, down sharply from wartime peaks near $120. That’s a drop of roughly 40 percent from the highs.

US gasoline prices fell back below $4 per gallon for the first time since the conflict escalated. Vance’s decision to publicly highlight Iran’s toll commitment suggests the White House is fully aware of the optics.

The risks traders are still watching

Reports of mines in the region have not been fully resolved, and tanker crews and insurers are pricing that uncertainty into their decisions. War-risk insurance premiums, which spiked during the conflict, may take longer to normalize than oil prices themselves.

The MOU is a framework, not a permanent treaty. Long-term transit protocols remain unsettled. Oil tankers are leading the recovery while other ships remain cautious, with total vessel traffic still below the pre-war standard of 130 to 150 daily crossings.

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