US, June 19 : Global crude oil benchmarks turned volatile once again after comments from US Vice President JD Vance raised fresh concerns over the stability of the fragile Middle East peace arrangement, with traders closely watching geopolitical risks and supply disruptions.
Brent crude slipped 0.65% to $79.33 per barrel after briefly touching $79.85, while West Texas Intermediate (WTI) declined 0.46% to $75.50. The fluctuations reflected renewed uncertainty in energy markets following signals of diplomatic strain linked to the Israel-Iran-Hezbollah conflict dynamics.
The market reaction came after Vance cautioned Israel against escalating military action involving Iran-backed Hezbollah in Lebanon, raising questions about the durability of the existing ceasefire understanding. Responding to Israeli criticism of the agreement, he stated, “You can’t just kill your way out of solving every single national security problem that you have,” while also emphasizing Washington’s long-standing support for Israel.
In earlier trading sessions, Brent had already dropped to its weakest level since March 2, while WTI reached its lowest point since March 4, marking a broader downward trend before renewed volatility returned to the market.
Investor attention remains firmly focused on the Strait of Hormuz, one of the world’s most critical oil transit chokepoints, which historically handled around 20% of global crude flows before the regional conflict escalated. Any disruption in this corridor continues to be a key risk factor for global energy pricing.
Under a 14-point memorandum of understanding between the United States and Iran, Tehran has agreed to allow toll-free passage through the Strait during a 60-day negotiation window, with a broader plan to restore full traffic capacity within 30 days. The agreement also extends to regional allies, including Lebanon, where Israeli operations against Hezbollah continue to fuel tensions.
Despite the framework, several major issues remain unresolved, including Iran’s nuclear programme and broader security guarantees. The agreement also outlines a proposed $300-billion international support plan aimed at assisting Iran’s economic recovery, though its implementation remains uncertain.
Market analysts expect a gradual normalization of oil flows through the Strait of Hormuz. However, many warn that price declines may be limited due to persistent supply constraints and resilient global demand conditions.
Goldman Sachs projects Gulf oil exports could return to pre-war levels by the end of July, with production recovery potentially extending into October. The bank estimates that restoring flows would require a significant increase in Hormuz transit volumes, bringing them closer to 70% of pre-conflict levels.
Meanwhile, BNP Paribas has indicated that crude prices are unlikely to revisit pre-conflict ranges, suggesting $75 per barrel may act as a long-term support level amid ongoing geopolitical risk premiums. Prior to the escalation, Brent crude had largely traded between $60 and $70 in early-year sessions.
Energy markets continue to remain sensitive after months of disruption triggered by US-Israel strikes on Iran and subsequent retaliatory actions that affected key shipping lanes, keeping traders cautious about the outlook for global supply stability.