The Opening of Hormuz and the Geopolitics of Energy Markets: An Anatomy of a Risk Premium

For a long time, discussions of energy security in the literature on international relations were framed as a technical issue of supply and demand. However, from the 2000s onwards, this reductionist framework began to be seriously questioned, particularly as empirical findings accumulated that documented the sudden and asymmetric effects of geopolitical ruptures on global energy markets. Whilst Henry Farrell and Abraham Newman’s conceptualisation of ‘weaponised interdependence’ systematically demonstrated how asymmetric positioning within global network structures affords states a coercive capacity; Daniel Yergin, meanwhile, emphasised that the ultimate guarantee of energy security lies not only in resource diversification but also in strategic buffer capacity and diplomatic access. The sharp fall in global energy prices observed following the peace agreement reached between the US and Iran on 15 June 2026 should be regarded as a striking case that brings this theoretical debate onto a concrete and measurable footing.

To fully grasp the issue, it is necessary to go back to the beginning of the process. The conflict, which began on 28 February 2026 with a joint military operation by the US and Israel against Iran, directly threatened the functionality of the Strait of Hormuz, creating a climate of severe uncertainty in global energy supply chains. Carrying approximately 20–21 million barrels of crude oil per day and accounting for around twenty per cent of global LNG trade, this strategic waterway is not only the export gateway for the Gulf states but also the lifeline for energy imports to Asia—namely Japan, South Korea, India and China. A blockage or effective closure of the Strait would amount to a supply shock, rendering it virtually impossible to bring viable alternative routes into operation in the short term for the regions in question. This structural vulnerability has made it inevitable that markets would begin to factor in a significant risk premium for crude oil from the very first days of the conflict; Brent crude testing the $98 threshold is a direct reflection of this reaction.

The variables that energy markets factor into their risk premium in a conflict environment are not limited solely to the threat of an immediate supply disruption. Markets are also constantly discounting, via prices, the parties’ capacity for escalation, whether channels for negotiation remain open, and whether the geopolitical crisis will become chronic. Indeed, it was observed that the Trump administration used the term ‘agreement’ at least thirty times throughout the conflict; these rhetorical interventions created not only expectations but also volatility in the markets. This tension between rhetoric and action has once again brought to the fore the guiding role of political communication in global financial markets — and the risk of disinformation inherent in this role. The fact that Brent crude oil fluctuated between a high of $98.08 and a low of $85.80 over the course of last week serves as numerical evidence of just how deep this volatility ran.

The peace agreement reached on 15 June and the subsequent price falls are a direct consequence of this situation; however, the sustainability of these falls remains open to debate, subject to the technical content of the agreement and its implementation mechanisms. According to the draft memorandum of understanding, the Strait of Hormuz is to be reopened to traffic immediately without any transit fees, and the volume of maritime trade is to be restored to pre-conflict levels within thirty days. In return, Iran is expected to commit to not developing nuclear weapons and to accept international monitoring mechanisms regarding its stockpile of enriched uranium. Whilst this framework structurally aligns with the fundamental logic of the 2015 JCPOA, it has taken shape in a context negotiated in the immediate aftermath of direct military escalation – unlike that process – and therefore faces a higher threshold of scrutiny both from the parties involved and in the eyes of the international public. The period leading up to the signing ceremony scheduled for 19 June in Switzerland will serve as the first test of how firmly this framework is grounded.

From the perspective of medium-term energy balances, perhaps the most critical question concerns the potential supply implications of Iran’s full integration into international markets. Iran’s production capacity, which was reduced due to sanctions, could approach 3.5 to 4 million barrels per day during the normalisation period. In a scenario where this additional supply enters the markets, the OPEC+ group’s capacity to balance production will be seriously tested; Saudi Arabia’s production flexibility policies will once again become a decisive factor. The renewed weight Iran will regain within the Gulf’s energy architecture will have profound repercussions not only economically but also in terms of regional power balances. This dynamic once again highlights the functioning of the feedback loop between energy geopolitics and the regional security architecture.

Turkey finds itself in a unique position, being both directly affected by this process and entering a potential arena of opportunities. For Turkey, which remains highly dependent on energy imports in the short term, the decline in oil and natural gas prices constitutes a positive external shock that alleviates pressure on the current account deficit; this situation will have particularly favourable implications for foreign exchange liquidity and inflation dynamics. On the other hand, when assessed from a more structural perspective, Iran’s reintegration into the international system holds the potential to lend concrete depth to Turkey’s vision of becoming an energy transit hub. For Turkey, which has already established a strong transit identity via the TANAP and TurkStream pipelines, it is of great importance to manage the upcoming negotiation period effectively in order to translate its geographical and infrastructural advantages into diplomatic leverage in the event of a scenario where Iranian gas is transported to Europe. The fact that Ankara has maintained its capacity to keep diplomatic channels open with both Washington and Tehran throughout the conflict suggests that it has already secured the positional flexibility required to capitalise on this opportunity.

However, one must not fall into the misconception that the current atmosphere of relief in the markets signifies lasting geopolitical stability. The historical trajectory of the Iranian nuclear dossier, which has been ongoing since 2003, has taught us time and again under what conditions diplomatic solutions have collapsed and how the costs of re-entering the system have multiplied. The implementation of the agreement, the effective functioning of the verification mechanisms and the sustainability of trust-building between the parties remain untested variables. Energy markets have not entirely priced out this uncertainty; the fact that Brent crude is still trading above pre-war levels reflects this caution in market terms.

In conclusion, the lesson to be noted in the history of energy markets regarding 15 June 2026 is this: the fragility of the global energy system is embodied not so much in technical capacity shortfalls as in the risk premiums generated by geopolitical uncertainty. The fact that the factor driving the price of a barrel of oil to $98 is not a production shortfall but the strategic fate of a single strait; and that a peace declaration can redistribute market value worth billions of dollars within hours, is the strongest evidence that energy analysis cannot be conducted solely within techno-economic categories. Security, diplomacy and energy: making visible the systemic risks that take shape at the intersection of these three fields constitutes one of the most valuable contributions the discipline of international relations can offer to global policymaking today.