Global Oil Markets React as U.S.-Iran Ceasefire Signals End to Strait of Hormuz Crisis
Global oil prices have tumbled to a three-month low, and stock markets closed at a record high amid fresh hopes that a U.S.-Iran ceasefire could end the greatest energy supply crisis in the history of the market. The price of Brent crude dropped about 4% to approximately $83 (£62) on Monday amid optimism that the Strait of Hormuz could reopen shortly and bring a return of Gulf oil exports to the market. Wholesale gas prices in Europe fell 6%.
President Donald Trump Announces End to Strait of Hormuz Conflict
The market reversal followed a period of extreme volatility. Oil futures, which had surged as much as 31% on a Sunday night to more than $100 a barrel, began a stunning reversal after President Donald Trump indicated the war was “very complete, pretty much” and that it could be over soon. Speaking to CBS News, the President noted that ships are moving through the Strait of Hormuz. Phil Flynn of the Price Futures Group described the previous overnight spike as a result of panic, stating, “We could see a situation where it ends really quickly and see oil collapse as much as it rallied.” He added that “if the Strait of Hormuz is open again and we’re moving oil, the biggest fear has gone away” and that the market is starting to believe Iran will not have the ability to wage war much longer.
The conflict had previously resulted in cumulative supply losses of over a billion barrels globally. In March, following U.S. and Israeli attacks on Iran and the subsequent closure of the Strait of Hormuz, the International Energy Agency (IEA) announced it would release 400 million barrels of crude from its joint emergency reserve. This reserve was originally established in response to the Arab oil embargo and other supply disruptions of the 1970s. The March announcement caused concern among market observers, as the volume exceeded the releases made by IEA member states in 2022.
China Draws 41 Million Barrels from Crude Inventories to Counter Supply Shock
China’s role in navigating the supply shock was significant. The IEA estimates China drew 41 million barrels from crude inventories during June, one of the largest monthly stock draws on record. By meeting domestic demand from storage rather than replacing barrels through imports, Beijing was able to ride out the sharp jump in Middle Eastern crude prices. The U.S. Energy Information Administration estimates China spent much of 2025 purchasing roughly 900,000 barrels per day for strategic and commercial storage whenever prices softened.
For more on this story, see Citi Predicts Oil Prices Could Drop to $60 as Hormuz Traffic Normalizes.
Vortexa Reports China’s June Crude Imports Slump to 10-Year Low
However, this strategy coincided with a broader slowdown in the Chinese refining sector. According to customs data, China’s June crude imports slumped 41.3% to 29.27 million tons, or 7.12 million barrels per day—the lowest level since October 2016. Imports from the Middle East hit their lowest level in ten years, and Iranian oil imports dropped 40% month-on-month to below 800,000 barrels per day, according to ship-tracking company Vortexa. Independent “teapot” refiners also cut operating rates as weak refining margins, slowing fuel demand, and higher crude prices squeezed profitability.
While the immediate threat to supply appears to be receding, the geopolitical and economic landscape remains complex. As traders weighed rising oil prices and escalating tensions, silver hovered near $86.50 an ounce, caught between the need for safe-haven assets and a closely watched U.S. inflation report. Economists expect the report to reshape expectations for Federal Reserve policy, with stronger inflation potentially reinforcing the case for higher interest rates for longer, which traditionally weighs on non-yielding assets.
Looking forward, the global energy industry faces a new phase of uncertainty. As the world recovers from the loss of over a billion barrels, there is a growing consensus that nations will look to build or replenish their oil reserves. Investors on Wall Street have reacted positively to the peace prospects, with the Dow rising by about 1% to hit a record high and the Russell 2000 index of small U.S. companies also reaching a new peak. China has urged “all sides” of the U.S.-Israel war with Iran to safeguard the Strait of Hormuz, as the global market continues to monitor the transition from conflict to stability.
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