Oil and Gas Retreat From Hormuz Peak, Cutting Energy's Inflation Contribution
ICE Brent crude front-month at $75.76 has surrendered nearly 30% of the Hormuz war premium, taking energy out of the inflation equation for the first time since February.
ICE Brent crude front-month traded at $75.76 on Wednesday (2026-06-24), roughly 30% below the $108.46 peak reached on Monday (2026-05-18) when U.S.-Iran peace talks collapsed and Strait of Hormuz tanker passages fell to a fraction of their pre-war average.3 NYMEX Henry Hub natural gas front-month sits at $3.16 and ICE Endex TTF front-month at €41.67, completing a retreat across the energy complex that has materially changed the inflation arithmetic for importing economies.
Energy was the primary driver of the first-half price shock. When the Strait of Hormuz effectively closed following military action on February 28, around 20% of global oil supplies — averaging 20 million barrels per day before the war — lost their main export channel, according to EIA data.2 Analysts estimated that every day of disruption removed 10 to 13 million barrels from international markets; at the height of the crisis, Goldman Sachs raised its fourth-quarter Brent forecast to $90 a barrel, citing reduced Middle Eastern output.3 Current prices are more than $14 below that figure.
The reversal began sharply. President Trump announced a two-week U.S.-Iran ceasefire on Wednesday (2026-05-20), and U.S. crude oil front-month closed down 16.4% that day to $94.41 — its largest single-session fall since 2020. International Brent dropped 13.3% to $94.75.1 Equity markets moved simultaneously, with the S&P 500 gaining 2.5% and the Dow adding 1,325 points, as traders priced in a broad macro reversal.1
Supply moved faster than the futures curve suggested. U.S. crude oil and petroleum product exports hit a record 14.2 million barrels per day in the week ending (week of 2026-05-11), 33% above the comparable period of 2025, responding to tanker repositioning that President Trump had flagged several weeks earlier.4 Total U.S. stocks of crude and products, including the Strategic Petroleum Reserve, fell by about 24.1 million barrels in the same week — one of the five largest weekly draws on record — as that export surge drained domestic inventory.4
Physical market tightness in mid-May was acute. Before the ceasefire, Strait of Hormuz shipments had fallen to a fraction of the 140 daily tanker passages that moved through the waterway before hostilities began on February 28.3 Paper markets reflected the stress directly, with an intraday 8% jump on Monday (2026-05-18) alone, before the ceasefire news erased most of the premium.6
Gas markets tracked crude lower but for distinct reasons. ICE Endex TTF front-month at €41.67 reflects the combined effect of LNG supply uncertainty during the Hormuz disruption and a broader risk-off energy selloff once the ceasefire took hold. NYMEX Henry Hub front-month at $3.16 moves on domestic U.S. production and storage dynamics rather than Strait flows directly — the two benchmarks have moved in the same direction without being driven by the same mechanism, and they do not substitute for each other in European supply analysis.
The inflation question pivots on whether the ceasefire holds beyond its two-week window. JPMorgan's trading desk told clients the market was "likely to treat this as a de facto end of the conflict," pointing to further equity upside as risk premia unwind.1 But the Economist has cautioned that structural labor-market tightness — particularly in the U.S. and UK — provides a separate upward pull on prices that does not disappear with the energy reversal.7,5
JKM for Asian LNG delivery at $15.74 leaves the Atlantic arb window open but narrowing relative to peak-crisis conditions. If Hormuz passage volumes recover toward their pre-war average and U.S. LNG export capacity continues running at record rates, the gas complex that amplified the first-half inflation print faces a substantial repricing. Whether CPI data follows the energy retreat — or the labor-market offset proves more durable — will set the terms of the second-half macro debate.1,6