Hormuz Reopens and Brent Breaks $79: The War Premium Unwinds Before the Inflation Data Shows It
The Strait of Hormuz is reopening, and the oil market has already moved on. Brent settled below $79 a barrel this week, its lowest level since early March and a fourth consecutive session of losses — the longest losing streak of the year. The premium that carried Brent above $114 in March, the fear that priced in a closed chokepoint handling a fifth of the world’s crude, has bled out in the span of a few sessions. The memorandum of understanding signed by Washington and Tehran reopens the waterway without Iranian tolls for at least sixty days and clears Iran to sell oil immediately. Traders are pricing the supply. They are not pricing the wait.
The tape has run ahead of the barrels
Nothing physical has changed yet. Hundreds of ships sit trapped in the Persian Gulf, and clearing the backlog will take weeks, in some cases months. Gulf producers that throttled back will need time to bring volumes back online. None of that has stopped the price from collapsing, because oil futures trade on the expectation of flow, not flow itself. Goldman Sachs cut its Brent forecast to $80 for the fourth quarter from $90, and to $75 for the 2027 average, while estimating Gulf flows have already recovered to eleven million barrels a day. The market has decided the war is over. The barrels are still catching up.
Next week’s data will show the peak, not the collapse
This is the part that matters for anyone reading the inflation tape. The Personal Income and Outlays report lands Thursday, June 25, carrying the May PCE price index — the Federal Reserve’s preferred gauge. May is the reference month. May predates the deal, predates the four sessions of selling, predates everything the market has digested this week. The May CPI already printed at 4.2 percent year over year, with energy accounting for more than sixty percent of the monthly increase. The PCE will read the same war premium at close to full strength. The single most important inflation number of the next two weeks will describe a world that no longer exists.
That divergence is the entire trade. The backward-looking official data captures the shock at its apex. The forward-looking tape has already begun pricing its unwind. Anyone treating next Thursday’s print as a signal about the second half of 2026 is reading a photograph of the past.
This is not a clean V
The disinflationary impulse is real, but it will not arrive in a straight line. Asian refiners have already booked cargoes through August, and more than 1.8 million barrels a day of Chinese refining capacity goes offline for maintenance in July, capping near-term appetite for the returning supply. Inventories remain tight, and the pump price is stickier on the way down than the futures curve. The relief is coming, but it lands in the third and fourth quarters, not in the number traders react to next week.
The oil shock and the inflation data have decoupled. For one more print, the Fed’s favorite gauge will tell a story the market has already stopped believing.