From $120 to $95: Crude oil prices surged 70% during the US-Iran war. Can Brent crude price drop to $80?

Crude oil prices have been among the biggest casualties and beneficiaries of the escalating US-Iran conflict. While fears of supply disruptions through the Strait of Hormuz triggered one of the sharpest rallies in recent years, history suggests that geopolitical oil spikes rarely last forever.

From the 1973 Arab Oil Embargo and the 1990 Gulf War to the 2022 Russia-Ukraine conflict, crude prices have typically surged when supply fears dominated headlines, only to witness meaningful corrections once markets gained clarity on supply restoration and geopolitical risks eased. The current cycle appears to be following a similar script.

Brent crude has surged around 70% since the US-Iran war began in late February 2026, climbing from around $72 per barrel to a peak of nearly $120. At one stage, prices touched an intraday high of about $126 per barrel as markets feared a prolonged closure of the Strait of Hormuz, a key artery for global oil shipments. However, Brent has already retreated to around $95 per barrel, marking a correction of roughly 25% from its peak. As of June 2026, prices remain nearly 30% above pre-conflict levels, indicating that the market continues to price in a degree of geopolitical risk.

Meanwhile, oil prices rose for a third consecutive day this week as renewed fighting in the region clouded hopes of a peace deal between Washington and Tehran. Brent crude climbed toward $97 per barrel, while WTI traded near $95 after gaining more than 7% during the first two sessions of the week. Israel continued attacks on Lebanon, while Iran launched missiles at neighbouring countries. Another round of talks between Israel and Lebanon is scheduled for Wednesday, although US President Donald Trump said he remains optimistic about securing an interim agreement with Tehran.

Why History Points to a Deeper Correction

Market veterans note that once geopolitical risk premiums begin to unwind, crude oil has historically corrected between 30% and 40% from its peak levels. Analysts believe the current downturn may already represent the early stages of such a move.

According to Vinit Bolinjkar, Head of Research at Ventura, a credible ceasefire and a reopening of the Strait of Hormuz could trigger another leg down in oil prices.

"If a credible ceasefire or Strait of Hormuz reopening materialises, we could see Brent gravitating toward the $80-85 per barrel range — implying a further 10-15% downside from current levels and a total correction of approximately 30-35% from peak," he said.

Bolinjkar noted that a 15% shortfall in global oil supplies, equivalent to roughly 15 million barrels per day, remains the market's base-case disruption scenario. Any restoration of that supply would likely become the primary catalyst for price normalisation. He also pointed out that Brent had briefly slipped below $100 whenever hopes of a peace agreement surfaced, only to rebound on fresh military action.

Despite the correction already seen, analysts caution against assuming that oil prices will fall in a straight line. The market remains highly sensitive to developments in the Middle East, particularly regarding shipping access through the Strait of Hormuz.

"Until the Strait of Hormuz is formally and verifiably reopened, oil prices are unlikely to correct in a clean, sustained manner — instead remaining range-bound with a downward bias, where every diplomatic headline will be a trading event," Bolinjkar added.

Moreover, Ross Maxwell, Global Strategy Operations Lead at VT Markets, believes investors should be careful about relying solely on historical comparisons because the current rally is largely driven by geopolitical risk rather than traditional supply-demand fundamentals.

"Whilst it is true that a meaningful correction often follows a sharp rise in Oil prices, once the key driver of the move begins to fade, applying that historical pattern to the current 70% surge in prices does not necessarily apply as it is not a typical supply-demand driven rally," he said.

Maxwell argued that the key question is not whether oil prices correct, but how much and how quickly. According to him, a durable ceasefire, open shipping routes and a stable diplomatic settlement between the US and Iran could result in a 30-40% correction from peak levels.

"If a durable ceasefire is reached, shipping routes remain open, and both sides move toward a stable diplomatic settlement, a correction of 30-40% from peak levels would be entirely possible. Markets have already shown when there are signs of de-escalation they can retrace sharply," he said.

However, he cautioned that any fragile or temporary agreement that leaves major disputes unresolved could limit the decline, with oil retaining part of its geopolitical premium and finding support well above pre-conflict levels. Ultimately, he said, the depth of the correction will depend less on historical precedents and more on the credibility and durability of any resolution between the US and Iran.

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