Oil Prices Retreat to Pre-War Levels Within Four Months
N.R. Finch
Brent crude has dropped 42% from its wartime peak of $126 a barrel in late April to around $73 — roughly where it stood before the Iran war began. One of history's largest oil-supply shocks was fully priced out in under four months.
How big was the supply shock?
The U.S. and Israel struck Iran on February 28, formally starting the war. On March 1 Iran closed the Strait of Hormuz — a chokepoint that normally carries about 20% of global oil shipments.
On March 8 Israel bombed four Iranian oil-storage facilities and one crude-production hub. Brent broke $100 a barrel that day, a level not seen since the 2022 Russia-Ukraine conflict.
The IEA labeled the disruption "the largest oil-supply interruption on record" on March 12. Rystad Energy estimated damage to Iran's energy infrastructure at $34 billion to $58 billion as of April 15.
Why did prices start falling from the very top?
On March 9 Brent neared $120 a barrel, the highest since the financial crisis. That same day Trump told reporters the war would end "soon" — and oil fell 6% the next morning.
This means → the market gave Trump's statements a label: the "TACO trade" (Trump Always Chickens Out), betting he would pull back whenever asset prices needed a lift.
In plain terms = every time war fears pushed oil higher, traders bet Trump would step in and call a halt — then sold ahead of it. That pattern repeated and capped the upside.
What did the ceasefire and strait reopening change?
On April 7 the U.S. and Iran reached a two-week ceasefire less than two hours before Trump's deadline. The next day Brent fell as much as 16% to about $95 a barrel; WTI dropped as much as 19%.
On April 17 Iranian Foreign Minister Araghchi announced the Strait of Hormuz was fully open to commercial shipping. Persian Gulf producers accelerated output increases and supply flowed back.
This means → the two core sources of risk premium — active hostilities and the strait blockade — were removed within two weeks of each other, pulling away the floor under prices.
Will oil keep falling from here?
Analysts note that oil markets carry a built-in bias toward "prices eventually return to normal." Since the 1970s oil crises, every major price spike has proved relatively short-lived.
This reflects a deeper market signal: traders default to treating supply shocks as temporary and rush to price in the return to baseline at the first sign of a ceasefire.
U.S.–Iran memorandum-of-understanding (MOU) talks are still under way. If a formal peace deal lands, the normalization of Iranian crude supply would be the main force pushing prices further down.
Content is for reference only, not financial advice.