Expectations of a sharp decline in crude oil prices when the Iran war ends appear logical directionally, but they depend on timing. Any price drop is likely to be determined by how quickly shipping operations, insurance, and operational processes return to normal.

Removing the geopolitical risk premium associated with the Strait of Hormuz is separate from broader supply and demand forces. Even with de-escalation, fundamental structural factors can dampen or amplify price movements over weeks and months.

Topic Importance: Geopolitical Risk Premium and Hormuz Shipping

The Strait of Hormuz concentrates a significant portion of crude oil flows from the Middle East, so conflict risk elevates geopolitical risk values. Reopening and securing the passage could reduce this value, though not necessarily on day one.

Political messaging was more decisive than market mechanisms. Donald Trump stated: "Oil prices will collapse like rocks once the war with Iran ends," describing the rapid decline that would occur after the war as nearly certain.