23rd June 2026
Why is oil falling despite Hormuz problems?
Several things are happening at once.
Traders increasingly believe the worst-case scenario of a prolonged closure of the Strait of Hormuz is becoming less likely.
Price at 9.00am 23 June 2026
$76.98 - Brent Crude
US-Iran negotiations and temporary agreements have led markets to expect more oil exports from the Gulf in the coming months.
Some tanker traffic has resumed and there is growing confidence that shipping routes will gradually reopen.
Markets are also anticipating sanctions relief that could allow more Iranian oil onto world markets.
In effect, traders are saying:
"The disruption may not last as long as we feared."
That expectation alone can push prices lower.
Why could prices fall further?
There are three major bearish factors:
1. Demand is not particularly strong
The global economy remains sluggish.
China is importing less oil than expected.
European industrial demand remains weak.
Higher interest rates have slowed growth across many economies.
If demand remains weak while supply improves, prices tend to fall.
2. More supply could return
If:
Iranian exports increase,
Hormuz shipping improves,
OPEC producers raise output,
then the market could move from shortage fears back towards surplus.
3. Speculators are unwinding "war trades"
Many investors bought oil expecting a prolonged crisis.
As those fears ease, they sell positions, accelerating the fall. This often creates moves larger than the actual change in physical supply.
Why prices may not collapse
There are still significant risks:
Hormuz is not fully back to normal.
Insurance and security issues remain unresolved.
One serious military incident could immediately reverse sentiment.
Global strategic reserves are lower than they were before the crisis.
That means a sudden jump back above $80–90 per barrel cannot be ruled out.
What does this mean for the UK?
For households in Scotland and the wider UK:
Good news
Petrol and diesel prices should gradually ease.
Wholesale gas prices have already fallen from their crisis highs.
Inflation pressures may reduce later in the year.
Less good news
Heating oil, petrol and electricity prices usually react with a delay of several weeks or months.
Retail energy suppliers tend to pass through increases quickly but reductions more slowly.
If there is no major escalation in the Middle East, Brent crude could drift back into the $70–75 per barrel range during the summer. However, if Hormuz disruptions worsen again or peace talks break down, prices could quickly move back above $85–90.