The Middle East is rarely a calm sea
For the first time since missiles fell on Tehran in late February, the world's oil markets have exhaled. Brent crude has returned to pre-war levels, tankers are moving openly through the Strait of Hormuz once more, and the inflation dread that shadowed global economies for months has begun to lift. Yet history counsels patience before relief becomes certainty — the agreements are new, the region is restless, and Europe now contends with a heatwave that is quietly rewriting the energy story from a different direction.
- Oil has shed more than a fifth of its value in four weeks, with Brent crude touching $72.24 a barrel — a price last seen the day before the US-Israel strike on Iran began.
- Tanker traffic through the Strait of Hormuz doubled in a single day, and ships are sailing with their tracking signals on again — a quiet but powerful signal that captains believe the danger has passed.
- Stock markets on both sides of the Atlantic hit records, and British drivers are days away from seeing petrol drop below 150p per litre for the first time in three months.
- A fragile US-Iran memorandum of understanding sets a 60-day negotiation window, but Israel's fresh strikes in Lebanon are already testing the ceasefire's edges.
- Even as the oil shock recedes, a brutal European heatwave is pushing electricity prices to multi-year highs — one crisis stepping into the shadow of another.
The price of oil has fallen back to where it stood before the conflict began. Brent crude dipped to $72.24 a barrel on Thursday — a level not seen since the day before the United States and Israel struck Tehran in late February — completing a drop of more than twenty percent in just four weeks.
The most visible sign of the shift is on the water. The Strait of Hormuz, through which roughly a third of the world's seaborne oil passes, has come alive again. Tanker numbers doubled in a single 24-hour period, and ships are now sailing with their satellite transponders switched on — a detail that matters, because for months captains had moved through the strait in deliberate silence, broadcasting nothing. The return to open navigation is itself a market signal.
Several forces are working together to push prices down: governments are still releasing strategic reserves, China has pulled back its purchases as its economy cools, and a quiet glut has built up from tankers that slipped out of the Persian Gulf during the worst of the tensions. Futures markets suggest ample supply now, with no shortage expected soon.
The relief spread quickly. The Dow Jones and the pan-European Stoxx 600 both hit records. Bank of England Governor Andrew Bailey, speaking from the Shetland Islands, noted that what had looked like an escalating crisis a month ago now resembles something closer to a truce. British drivers will feel it too — petrol is expected to fall below 150 pence per litre within days, the lowest in three months.
The calm, however, is not guaranteed. A US-Iran memorandum of understanding signed last week opens a 60-day negotiation window, but Israel struck targets in southern Lebanon on Wednesday — the first such strike since a ceasefire took effect days earlier. Analysts expect oil to trade between $60 and $80 a barrel depending on how those negotiations unfold and whether new flashpoints emerge.
And even as this particular shock fades, another is forming. A severe heatwave is driving European electricity demand to record levels, pushing peak wholesale prices to multi-year highs across the continent. One crisis may be easing; another is already arriving to take its place.
The price of oil has collapsed back to where it stood before the missiles flew. On Thursday, Brent crude—the global standard by which energy markets move—dipped to $72.24 a barrel, a level not seen since the day before the United States and Israel launched their strike on Tehran in late February. The drop has been steep and sudden: prices have fallen more than a fifth of their value in just four weeks, and with that fall has come a visible easing of the anxiety that gripped markets when the conflict first erupted.
What changed is visible on the water. The Strait of Hormuz, the narrow passage through which roughly a third of the world's seaborne oil flows, has come alive again with traffic. In a single 24-hour period this week, the number of tankers transiting the strait doubled to its highest level since the conflict began. More striking still: these vessels are now traveling with their satellite tracking signals switched on, a sign that captains believe the passage is safe enough to broadcast their location. For months, ships had moved through the strait with their transponders dark, a precaution born of genuine fear. The return to normal navigation is itself a market signal, and analysts say it has helped push prices down.
The mechanics of the price collapse involve several forces working in concert. Strategic petroleum reserves that governments released into the market to stabilize prices are still flowing. China, the world's largest oil importer, has sharply reduced its purchases as its economy cools. And the sheer volume of tankers that had quietly slipped out of the Persian Gulf during the worst of the tensions—moving without their tracking systems active—has created a glut of supply in key markets. One analyst at Swissquote noted that August futures are trading cheaper than September contracts, a pattern that signals ample oil available right now, with no shortage expected soon.
The relief has rippled outward. Stock markets on both sides of the Atlantic surged on Thursday. The Dow Jones hit a record. The pan-European Stoxx 600 did the same. The fear that had gripped investors—that another geopolitical shock would send inflation spiraling again—has begun to fade. Andrew Bailey, the governor of the Bank of England, acknowledged the shift during a visit to the Shetland Islands, noting that what had seemed like an escalating crisis a month ago now appears to have stabilized into something resembling a truce. The sharp drop in energy prices this week, he said, was particularly striking.
For ordinary drivers in Britain, the numbers are becoming visible at the pump. Petrol is expected to fall below 150 pence per litre in the coming days—the cheapest it has been in three months. Diesel should drop below 160 pence. These are meaningful savings. Petrol had peaked at 159.53 pence on May 28, and diesel had hit 191.54 pence in mid-April. The RAC, the motoring organization, has called on retailers to pass these wholesale savings directly to drivers without delay.
Yet the calm is fragile. The United States and Iran signed a memorandum of understanding just last week committing to a 60-day negotiation period aimed at a permanent peace deal. But tensions are already rising again over the terms. Israel struck targets in southern Lebanon on Wednesday, killing two people according to Lebanese state media—the first Israeli airstrike in Lebanon since a ceasefire took effect on Saturday. It is a reminder that the Middle East remains volatile, that agreements can unravel, that new flashpoints can ignite.
Analysts predict oil will likely trade in a band between $60 and $80 a barrel in the weeks ahead, with the direction dependent on how negotiations proceed and whether new conflicts emerge. As supply returns and demand begins to recover, countries will start refilling their strategic reserves, which will absorb some of the additional oil coming to market. China, too, will likely resume buying as its economy stabilizes. But the geopolitical risks remain embedded in the calculation. The Middle East, as one analyst put it, is rarely a calm sea.
Meanwhile, Europe faces a different energy crisis entirely. A punishing heatwave is driving electricity demand to record levels. Peak evening wholesale electricity prices have hit multi-year highs across several European markets this week as offices, public buildings, and homes crank up cooling systems. One energy shock may be fading, but another is taking its place.
Citações Notáveis
There were comments from the US that it would be over any day soon—they were going on for a month almost. But it does look like a truce has broken out.— Andrew Bailey, Governor of the Bank of England
Fears of a long-lasting global energy crunch induced by the Iran conflict are slinking away, with oil prices sinking back towards pre-crisis levels.— Susannah Streeter, Chief Investment Strategist at Wealth Club
A Conversa do Hearth Outra perspectiva sobre a história
So oil prices have fallen back to where they were before the conflict. What actually changed on the ground to make that happen?
The tankers came back. For months, ships were moving through the Strait of Hormuz with their tracking signals off—invisible, essentially. Now they're turning those signals on again and moving openly. That's a market signal that says the passage is safe. When you can see the oil moving again, prices fall.
But there's still a deal being negotiated. Couldn't this all reverse?
Absolutely. The memorandum they signed is only for 60 days. Israel just struck Lebanon this week, which broke a ceasefire that had only been in place since Saturday. The structure is there for another flare-up. Analysts are pricing in that possibility—they're predicting oil will swing between $60 and $80 a barrel depending on what happens next.
What about the people buying petrol at the pump? Are they actually going to see these savings?
That's the question. Prices are expected to fall below 150 pence per litre in the UK, which would be the cheapest in three months. But the RAC had to explicitly call on retailers to pass the savings along. There's no guarantee they will immediately.
You mentioned China stopped buying oil. Why does that matter?
China is the world's largest oil importer. When it stops buying, that's demand destruction. It signals economic weakness. But as tensions ease and confidence returns, China will start buying again, which will absorb some of the supply that's now flooding the market.
And Europe is dealing with something else entirely?
A heatwave. Electricity prices are hitting multi-year highs as people run air conditioning. One energy crisis is fading while another one takes its place. That's the real story underneath—the world is still scrambling to manage energy in a volatile moment.