The United States and Iran are expected to sign an agreement Friday to reopen the Strait of Hormuz, ending a three-month blockade that has roiled global energy markets. Brent crude traded near $81 a barrel Tuesday as traders weighed the potential for renewed flows through the critical waterway.
Three months of closure
The strait, a narrow passage between the Persian Gulf and the Gulf of Oman, handles about a fifth of the world's oil shipments. Iran's closure in early 2024 cut off access for tankers carrying crude from Saudi Arabia, Iraq, Kuwait, and the UAE, sending prices sharply higher. No official statement has come from either government, but diplomatic sources familiar with the talks confirmed the Friday signing.
Market reaction so far
Brent crude edged down slightly after the news broke, but remains elevated compared to pre-closure levels. The Polymarket prediction platform, where users bet on real-world outcomes, gives only a 21% chance that the strait will be fully normal by June. That suggests many traders doubt the deal will stick or that implementation will be smooth.
What the deal covers
Details are sparse. The agreement reportedly includes a phased reopening over several weeks, with international naval escorts for the first convoys. Iran has demanded guarantees that sanctions on its own oil exports will be eased, a condition the US has not publicly accepted. Neither side has confirmed the exact terms or a timeline for full restoration of traffic.
Unresolved questions
The biggest unknown is whether Iran's Revolutionary Guard, which controls the strait, will abide by the deal. Previous truces have unraveled quickly. Shipping companies are also waiting for insurance rates to drop before resuming normal routes. The Friday signing is a step, but the hard part — actually getting tankers through — starts after the ink dries.
