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The Peace Deal Is Real — And Coming Friday
The US and Iran agreed to a permanent end to fighting and reopening of the Strait of Hormuz, with an official signing ceremony scheduled in Switzerland for Friday, June 19. Crude oil already fell to $80.20 a barrel on June 15 — down more than 23% in the past month. Markets are reacting before the ink is even on paper.
The Smuggling Story Is the Bridge, Not the Solution
The US military has overseen scores of secretive ship-to-ship oil transfers since early May, using aerial and water drones and helicopters to guide convoys near Fujairah and Sohar — ironically borrowing a technique Iran itself has used for years to evade sanctions. At least 92 ships have been involved. This was the workaround that kept some oil moving while the Strait was effectively closed. It is being superseded by the actual reopening, not replaced by it.
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JetA prices surged 121% y-o-y by April 2026, with IATA projecting an average of roughly $152 per barrel for the year. The EIA’s most recent forecast had Brent averaging $79/barrel for 2026 — a sharp upward revision from $58/barrel just a month earlier.
The Honest Timeline — This Is the Part That Matters
The EIA’s June Short-Term Energy Outlook assumes the crude oil spot price will average around $105/barrel in June and July, even with the reopening underway, before gradually falling to an average of $89/barrel by 4Q26. Most shut-in oil production is not expected to be fully restored until 1Q27. Unwinding the largest oil disruption in history will take longer than creating it — drilling has been shut down, suppliers have been redirected, and thousands of tankers have been rerouted to different ports. The risk of underwater mines and renewed fighting means traffic resumption will be cautious, not immediate.
Why Jet Fuel Lags Even Further Behind Crude
Cheaper crude does not instantly mean cheaper jet fuel. Fuel costs take time to move through the system, and after months of disruption, the supply chain has catching up to do. Refining capacity, regional product flows, and airline hedging structures all add lag to the crude price recovery — the same lag that airline P&Ls already absorbed on the cost side.
The Track Record
Whether Friday’s ceasefire holds is, in the end, an empirical question — and Iran’s record on prior agreements offers a complicated answer, not a simple one.
The 2015 JCPOA is the closest comparable case. From 2016 through 2018, the IAEA issued more than a dozen compliance reports and found no evidence of substantive Iranian violations. The US State Department’s own April 2018 assessment stated Iran was “transparently, verifiably, and fully implementing” the deal. President Trump nonetheless declined to recertify the agreement in October 2017 and withdrew the US from it in May 2018, thereby unilaterally reimposing sanctions. Iran did not begin exceeding the deal’s enrichment limits until roughly a year after that US withdrawal.
That sequencing is contested. Critics of the deal argue Iran was already violating its spirit before formal breaches began; defenders point to the IAEA’s contemporaneous verification record as the more reliable evidence. Both positions are represented in the public record.
What is not contested is what happened next. Iran reduced its compliance in calculated 60-day steps, each publicly announced. After the killing of Qassem Soleimani in January 2020, Iran abandoned all remaining operational limits. By 2024, Iran held more than 6,000 kg of enriched uranium and centrifuge capacity far in excess of JCPOA limits. The EU’s Council formally maintained its sanctions in October 2023, citing Iran’s non-compliance.
Separately, this week’s reopening story carries its own irony. The ship-to-ship oil transfer technique the US military is now using to move crude through the Gulf is one that Iran itself has used for years to evade sanctions on its own exports. Whoever is moving barrels, and however they’re doing it, disguising origin and ownership at sea is well established in this region by multiple parties for different reasons.
Bottom Line
None of this predicts what happens after Friday’s signing. It does mean that institutional readers modeling fuel costs into Q3 and Q4 should weigh the “ceasefire holds cleanly” scenario against a real, recent history of agreements that did not survive their first political stress test — regardless of which side bears responsibility for that outcome. (Israel/Lebanon — where a ceasefire has repeatedly frayed under similar pressure — is the ‘Canary in the Coal mine.’)
Crude at $80 and falling is genuinely good news. The EIA’s own numbers say jet fuel relief on airline P&Ls is a 4Q story at the earliest, not a June one.
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