Oil has fallen from above $84 to $75.44 in the past week as the United States and Iran extended their ceasefire and moved to reopen the Strait of Hormuz. The market is treating this as resolved. The text of the agreement treats it as a 60 day window.
The Chain from the Strait to the TSX Energy Weight
The Strait of Hormuz carries roughly 20% of the world's oil and liquefied natural gas trade, according to Axios. When the strait closed in February, that volume of supply came off the market within days, and WTI surged to $90.90 inside the first week of fighting. Canadian energy producers, who carry meaningful weight on the TSX composite, rose with it. Canadian Natural Resources fell 4.1% this week, to $60.80, as that same premium unwinds in the other direction. The chain runs from a shipping lane most Canadian investors will never see to a sector weight that shows up directly on a TSX statement.
The same mechanism touches the Canadian dollar and Government of Canada bond yields. Oil is a Canadian export, so a falling price pressures the currency from one direction even as this week's Federal Reserve driven currency weakness pushes it from another. The two forces are moving the same way right now, which is part of why the Canadian dollar weakened to 1.4142 per US dollar this week, its softest level since April 2025.
What the Agreement Actually Promises, and for How Long
The memorandum signed this week, reported in detail by Al Jazeera, extends the ceasefire by 60 days and opens a 60 day negotiating window on the harder questions: Iran's nuclear programme, the future administration of the strait alongside Oman, the lifting of sanctions, the unfreezing of Iranian assets, and a proposed $300 billion reconstruction plan.
The safe passage guarantee that is actually moving the oil price has its own expiration date written into the text. Iran commits to its best efforts for the safe passage of commercial vessels for 60 days only, not indefinitely. The Joint Maritime Information Center has also advised vessels to route closer to Oman's coast to reduce the risk from mines still present in the strait, a sign the waterway is being managed around residual risk rather than fully cleared.
Why This Is a Tail Risk Flag, Not a Base Case Call
The base case, and what is currently priced, is that the 60 day window leads to a durable resolution: the strait stays open, the sanctions waivers continue, and the de-escalation holds. That is a reasonable base case, and nothing here argues against it.
The tail risk is that this is not the first time this exact pattern has played out. Iran agreed to a two week ceasefire and a provisional Hormuz opening on April 8. The Islamabad talks that followed failed, and the United States reimposed a naval blockade. A dispute over $24 billion in frozen Iranian assets sits inside both that failed process and this week's agreement. Israel, a co-combatant in the war since February, has not signed onto or recognized the current memorandum, which means the ceasefire formally binds two of the three parties who have been fighting.
WTI has now retraced most of its war premium twice in four months, and the first retracement did not hold.
WTI traded at $66.43 on February 18, before the war began, and reached $90.90 in early March after the conflict's first week. It has fallen to $75.44 as of June 18, following the ceasefire memorandum between the United States and Iran.
None of this is a prediction that the agreement fails. It is a record that the market has rallied on a Hormuz ceasefire once already this year, and that the rally did not survive the talks that followed it.