Oil prices have fallen to levels not seen since before the war in Iran started, offering relief to households, businesses and governments around the world.
The slide this week in the price of Brent crude oil, the international benchmark, which dropped below $72 a barrel on Friday, is also a significant psychological milestone. As fighting flared, the commodity served as a real-time barometer of the war’s toll on the global economy.
Oil prices had soared as high as $118 a barrel in the early stages of the war, after Iran effectively blocked ships from passing through the Strait of Hormuz, a vital shipping route for crude oil. But they began to fall after efforts to negotiate a cease-fire and evacuate ships trapped in the Persian Gulf. American and Iranian officials agreed in mid-June to reopen the strait, through which about 20 percent of the global supply of oil flows.
Traffic through the strait has picked up markedly in recent days. Since the United States lifted its naval blockade last week, more than 330 vessels have passed through the strait, according to Kpler, a global maritime data firm. Only a handful of ships braved the passage each day during the height of the conflict, but the recent upticks in traffic have been, at most, about half of the typical daily volumes before the war.
Iran’s military struck a container ship in the strait on Thursday, jolting markets, an action that President Trump on Friday called a “foolish violation” of the cease-fire between the two countries. It was the latest setback for shipowners, which remain wary about operating in the gulf, after periodic demands from Iran to follow its preferred route and possibly pay fees for passage. Mr. Trump has insisted that there would be no tolls, insurance costs or charges for vessels traveling through the strait.
On Friday, Iran’s foreign ministry reiterated that “safe passage through the Strait of Hormuz is not guaranteed” for ships that do not first seek authorization from Tehran to navigate the waterway.
That did not appear to deter investors: Oil is set to record a sixth consecutive weekly decline, although the descent has often been choppy. Over the past 24 hours, prices have briefly dipped below the levels not seen since Feb. 27, the eve of the war in Iran, when Brent crude settled at $72.48 a barrel.
It would take something “much more meaningful” than an isolated ship attack to send oil prices rising again for a sustained period, said Allen Good, director of equity research at the research firm Morningstar.
“The market continues to look through these flare-ups as it perceives Trump and the Iranians as ultimately committed to a near-term deal and the opening of the strait,” Mr. Good said. At the same time, a large amount of oil coming through the strait is poised to hit the market all at once, putting downward pressure on prices.
Still, the economic effects of energy shocks tend to linger, said Ken Wattret, the vice president of global economics at S&P Global Market Intelligence. He warned that it may take months for central banks to rein in inflation caused by the shock. “We shouldn’t conclude that just because crude prices are back where they were in late February that the impact on the global economy is over,” he said.
Lower oil prices may take time to trickle down to consumers. U.S. gasoline prices, which tend to lag changes in oil prices, declined to $3.90 a gallon on Friday, according to the AAA motor club, still some 30 percent above where they stood before the war started.
“It’s unlikely we’re going to immediately see much lower prices at the pump,” said Brett House, a professor of economics at Columbia Business School. The United States, he added, is heading into its peak summer driving season at a time when the government’s oil reserves have been depleted because of the war.
Persian Gulf countries are now exporting almost 15 million barrels of oil a day, up from less than 10 million barrels a day in May, analysts at the International Energy Agency, a multilateral organization in Paris, said in a report this week. They attributed most of that uptick to increased shipping through the strait. (Gulf countries were exporting almost 25 million barrels of oil a day prewar, most of that through the strait.)
The increase in oil supply comes at a time when global demand is expected to drop by almost five million barrels a day in the second quarter of 2026 partly because consumers scaled back their energy use during the conflict, the I.E.A. said.
“Prices have since eased significantly as demand has fallen sharply, and on increased optimism that a deal would be reached to enable more regular shipping flows through the strait,” the analysts wrote.
The agency is among those cautioning that a rebound in oil production may create a glut next year that will make oil even cheaper. JPMorgan Chase analysts recently said they expected the price per barrel to fall into the low $60s in the second half of 2027.
