Oil prices fell sharply on Monday, with July West Texas Intermediate crude settling down 4.13, or 4.87%, while July reformulated blendstock gasoline (RBOB) lost 0.1026, or 3.36%. The selloff accelerated after a U.S.-Iran de-escalation framework raised expectations for the Strait of Hormuz to reopen, shifting focus toward potential normalization of Middle East supply and downstream activity.
Despite lingering geopolitical and supply disruption risks, traders weighed signals that crude production and refinery operations could restart if shipping insurance and logistics return to normal. At the same time, the U.S. outlook for higher crude output added pressure to prices.
Key takeaways
- Price move: July WTI crude fell 4.87% to end lower on the day; July gasoline dropped 3.36%.
- Catalyst: The U.S. and Iran agreed to end their war and reopen the Strait of Hormuz, with Trump saying it would reopen after a peace-deal signing in Switzerland.
- Supply implication: Industry commentary pointed to the possibility of more vessel traffic and a stepwise restart of production and refineries if nuclear talks conclude and insurance coverage improves.
- Market takeaway: Expectations for eased Middle East bottlenecks outweighed support from disruptions tied to Russia and tight global inventories.
- Watch item: Shipping flow changes and U.S. supply data will be critical to whether the downside in crude and gasoline extends.
What drove the move
Crude and gasoline prices sold off broadly on Monday, with both contracts hitting their lowest levels in about two months. The immediate trigger was a shift in expectations for Middle East logistics after the U.S. and Iran agreed to end their war and reopen the Strait of Hormuz.
President Trump said the strait would reopen after this Friday’s signing of a peace deal in Switzerland, which would kick off 60 days of talks on Iran’s nuclear program. He also warned that if no agreement is reached, the U.S. could restart military attacks—an uncertainty that matters for risk premiums in oil but did not prevent the initial de-risking trade.
According to Kpler, nearly 600 vessels were still stuck in the Persian Gulf awaiting departure through the strait, while hundreds more were positioned on the other side. Vortexa added that if the U.S.-Iran deal is completed and insurers are willing to cover vessels again, ballast tanker activity would likely rise first, followed by restarts of crude production and then refineries.
Alongside the Hormuz-specific factor, the U.S. supply outlook weighed on prices. The U.S. Department of Energy raised its 2026 U.S. crude production estimate to 13.72 million barrels per day from a May estimate of 13.65 million bpd. A higher expected baseline tends to cap rallies when traders also anticipate easing disruptions abroad.
Market reaction: support signals vs. easing expectations
Oil prices were pressured despite ongoing supply risks. Crude had support from continued Ukrainian drone attacks on Russian oil infrastructure. Bloomberg reported that Russia banned jet fuel exports after attacks on Russian refineries reached a record high in May. Bloomberg data cited refinery runs falling 13% year over year in May to 4.58 million bpd, the lowest since October 2009, while U.S. and EU sanctions have further constrained Russian exports.
International supply tightness has also remained a factor. The International Energy Agency said in a report released in May that global oil inventories declined by about 4 million bpd in March and April, and that the market would remain “severely undersupplied” until October even if the conflict ends soon. Separately, Goldman Sachs estimated that Persian Gulf crude output has been curtailed by about 14.5 million bpd, drawing down nearly 500 million barrels from global stockpiles—potentially approaching a billion barrels by June.
Still, the market leaned more heavily toward the potential reversal of Hormuz-linked disruptions. Vortexa reported Monday that crude stored on tankers that have been stationary for at least seven days fell 6.9% week over week to 76.50 million barrels in the week ended June 12. That decline aligns with a view that disruptions may eventually unwind if the de-escalation proceeds.
On the production side, bearish longer-term supply signals also circulated. OPEC delegates indicated on May 14 that the cartel plans to continue a sequence of quota increases, aiming to complete the return of halted production by the end of September. OPEC has already formally agreed to restore about two-thirds of a 1.65 million bpd supply cut made in 2023 and planned to increase output in three more monthly stages. At the same time, OPEC’s May crude production fell 3.36 million bpd to a 40-year low of 16.33 million bpd, though the article noted that any additional production hikes may be constrained by regional conflict-driven limitations.
Recent U.S. and rig data add to the pressure
U.S. data provided additional context for traders weighing supply and demand balances. According to the latest EIA figures referenced in the report, as of June 5 U.S. crude inventories were 5.3% below the seasonal 5-year average, gasoline inventories were 5.9% below, and distillate inventories were 13.9% below. U.S. crude production for the week ending June 5 increased 0.7% week over week to 13.799 million bpd, though it remained mildly below the record high of 13.862 million bpd from the week of November 7.
Upstream activity also pointed to gradual supply responsiveness. Baker Hughes reported last Friday that the number of active U.S. oil rigs rose by 2 to 433 in the week ended June 12, an 11-month high. While that is up from the 406 rigs recorded in December 2025, the count remains well below the 627 rig peak from December 2022.
What to watch next
With oil and gasoline prices retreating sharply, investors are likely to focus on whether the Strait of Hormuz reopening timeline holds and how quickly shipping bottlenecks unwind. The key near-term question is how quickly tanker traffic, insurance coverage, and downstream restarts translate into higher realized flows—versus how persistent geopolitical and infrastructure disruptions keep risk premiums intact. Traders will also look for further U.S. inventory and production updates and any follow-through on OPEC’s planned quota path as the market seeks clearer evidence on the timing of supply normalization.
