Brent Crashes 30% to $77 as Versailles MOU Reshapes Risk Map: Weekly Barometer Records Biggest Shift Since Launch

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Brent crude oil has collapsed from its crisis peak of $111 per barrel to approximately $77 in under five weeks, after the United States and Iran signed a 14 point memorandum of understanding at the Palace of Versailles on June 18 that aims to reopen the Strait of Hormuz and end the war that has paralyzed Middle East shipping since late February.

The latest edition of this publication’s Geopolitics and Global Risk Barometer, updated weekly and accessible at any time through the main navigation menu, recorded its largest single week shift since launching in May. The overall risk index fell from 7.0 to 6.0 out of 10, with four of the seven tracked risk zones receiving score changes. The Strait of Hormuz was downgraded from 10 to 8, the Red Sea from 9 to 8, the Sanctions and Dark Fleet category from 8 to 6, and Climate Regulation and Infrastructure from 5 to 4.

The agreement, formally titled the Islamabad Memorandum of Understanding, was signed electronically by President Donald Trump at Versailles and separately by Iranian President Masoud Pezeshkian. Pakistan’s prime minister Shehbaz Sharif, who mediated the negotiations, confirmed the signing.

Under its terms, Iran agreed to allow toll free safe passage of commercial vessels for 60 days from the Persian Gulf to the Sea of Oman, with demining to begin within 30 days. The United States committed to terminate all sanctions, release frozen Iranian assets, and begin removing its naval blockade of Iranian ports. Iran also reaffirmed that it will not develop or procure nuclear weapons, with a mechanism for its enriched material stockpile to be agreed during the 60 day negotiating window.

The deal triggered an immediate market reaction. Goldman Sachs cut its fourth quarter Brent forecast to $80 per barrel and said it expects Persian Gulf crude exports to return to pre war levels by end of July. The US Treasury Department authorized a 60 day license for the production, delivery, and sale of Iranian oil and petroleum products on international markets. Iran shipped more than 30 million barrels in the past week and cut prices for cargoes bound for China, according to Kpler data.

Vice President JD Vance told CNBC that 16 million barrels of oil transited the Strait of Hormuz on June 21 alone, which he described as a single day record surpassing even pre war volumes. US Central Command reported 55 ships transiting that day.

Two days after the MOU was signed, Iran’s Islamic Revolutionary Guard Corps declared the strait closed again, citing continued Israeli strikes in southern Lebanon as a “blatant breach” of the agreement. Iran’s foreign ministry contradicted the military within hours, telling state media that shipping was “operating normally.”

Ship tracking data told a more uncertain story. Windward, the maritime intelligence company, reported just 12 vessels crossing on June 22, down from 35 the previous day. Five of eight inbound vessels had their Automatic Identification Systems turned off, a practice known as going dark. Windward described the traffic profile as resembling “the late blockade baseline more than a functioning open strait.”

Eurasia Group senior analyst Gregory Brew noted that the question of whether the strait is open ultimately rests with private industry. “It’s not Iran or the US who decide that the strait is open. It’s shipping and insurance companies,” he posted on social media.

The Lebanon conflict remains the most volatile element in the framework. Hezbollah rejected ceasefire terms on June 4, demanding a full Israeli withdrawal from southern Lebanon before any truce. Israeli strikes killed 21 people on June 19. The International Maritime Organization said it will take time to ensure “all necessary safety and security guarantees” are in place for crew safety. The US Energy Information Administration forecasts Hormuz traffic resuming meaningfully in the third quarter of 2026 but not reaching pre conflict levels until early 2027.

For operators in the breakbulk, project cargo, and multipurpose vessel segments, the barometer’s shift from extreme to high risk on the Hormuz and Red Sea corridors is significant but not yet actionable.

War risk insurance premiums remain elevated. The central channel of the strait is still mined. Lloyd’s List has warned that normalization of tanker and oil markets would take until at least September even under an immediate full reopening, while 45 confirmed maritime incidents have been recorded since the crisis began.

Kuwait has lifted force majeure notices and ADNOC in Abu Dhabi has resumed supply operations, positive signals for energy related project cargo demand in the Gulf. But the MOU’s survival depends on whether the Lebanon conflict can be contained within the 60 day window. If it cannot, the barometer could reverse sharply.

The Geopolitics and Global Risk Barometer is updated every week and is available through the site’s main navigation menu.