Deal done, but don't count on cheap Oil yet; cautions Mirae Asset Sharekhan

Shipping data firm Kpler estimates that daily transits may rise to around 40 vessels within the first month - less than half the pre-war average of 100, says Mohammed Imran, of Mirae Asset Sharekhan.

After 107 days of near-total closure, the Strait of Hormuz is set to reopen. President Donald Trump announced on June 13 that a memorandum of understanding had been reached with Tehran, with the formal signing scheduled for June 19 in Geneva — with Pakistan serving as mediator.  Iran's Deputy Foreign Minister confirmed the agreement on state television but underscored that Tehran would not begin implementation before the ink dried in Geneva. Upon signing, the US will lift its naval blockade of Iranian ports and authorise mine-clearance operations, while Iran commits to halting all restrictions on tanker passage.  Markets were quick to respond Brent fell more than 4 percent on Friday, June 13, dropping toward $86.50 per barrel — some $11 below the June 8 spike above $97 — and extended losses toward $83–84 intraday, its lowest since early March. 

Risks Before the Deal Is Done

  The agreement is an MOU, not a final peace settlement — and it comes with a 60-day nuclear negotiation window that must be satisfied before any permanent resolution.  Iran's Foreign Ministry confirmed the deal still required domestic government approval ahead of the Geneva signing. If nuclear verification talks collapse within that 60-day window, the agreement risks unravelling and returning the strait to crisis.  Separately, Israel — not a party to the memorandum — has continued its Lebanon campaign, claimed operational control of Wadi Saluki and pledging to press forward. Hamas and Hezbollah have both rejected disarmament proposals, keeping the broader regional flashpoint alive.  Any significant Israeli escalation could hand Tehran a political pretext to stall or exit the framework. The US also faces an unresolved dispute with Iran over its proposed transit tolls — a legal and sanctions minefield for international shipping companies that no party has formally settled. 

The Hormuz Normalisation Timeline

  Markets have priced sentiment, not supply. The strait officially reopens upon the Geneva signing on June 19 — but physical normalisation is a separate, far slower process. The Pentagon estimates mine-clearance operations alone could take up to six months, even with three dedicated minesweeping vessels already in the region.  Shipping data firm Kpler estimates that daily transits may rise to around 40 vessels within the first month — less than half the pre-war average of 100. An estimated 118 tankers remain stranded in the Persian Gulf and could begin clearing within 15 days once safe corridors are verified.  However, war-risk insurance premiums remain at multiples of pre-war rates and are notoriously slow to reprice downward. Underwriters will not bring premiums back to normal until independent observers confirm clean safe passage over multiple successive weeks. Energy flows through the strait are unlikely to exceed half of pre-war levels within the first month, with a full recovery stretching toward late 2026 at the earliest. 

Oil Market Outlook

  The broader risk in the oil market have subsided,  and going forward the crude price trajectory from here will be shaped by three variables: the pace of mine-clearance and insurance normalisation, the outcome of the 60-day nuclear verification window, and the durability of the Lebanon ceasefire that underpins the broader framework.  Brent at $83–87 reflects relief, not resolution. The $24 billion in Iranian assets partially unfrozen under the MOU terms may provide Tehran with enough economic incentive to hold the deal, but verification disputes with the IAEA — whose inspectors confirmed 'enormous damage' to Fordow, Natanz, and Isfahan — will keep uncertainty elevated.  A clean implementation scenario points Brent toward the $75–80 range by Q4 as stranded supply returns and OPEC spare capacity re-engages. A breakdown in the 60-day nuclear window could quickly retrace prices to $95 or beyond.  (Disclaimer: This article is by  Mohammed Imran, research analyst, Mirae Asset Sharekhan. Views expressed are his own.)