The United States and Iran signed a memorandum of understanding at Versailles on June 17 that reopened the Strait of Hormuz and started a 60 day clock on a final settlement. Article 5 of the agreement is specific about what Iran has actually committed to: safe passage for commercial vessels "with no charge, for 60 days only." After that window, future administration of the strait reverts to negotiation between Iran, Oman, and other Gulf states.
Oil markets have responded as though the underlying risk is resolved. WTI has fallen to roughly 72 to 74 US dollars a barrel, within range of where it traded before the conflict began in late February, according to Trading Economics. That is a reasonable response to the genuine de escalation that has occurred. It is a less reasonable response to a deal whose central commercial provision has an expiry date written into the text.
What Is Actually Flowing Through the Strait
Tanker traffic has resumed, but slowly. MarineTraffic data cited by CNN this week showed roughly two dozen vessels transiting the strait over a 24 hour period, a meaningful improvement from the near total halt earlier in June, but still a fraction of the roughly 110 vessels a day that moved through Hormuz before the war. Kpler's Dimitris Ampatzidis estimated it would take two to three months from the deal's signing for shipping to return to prewar movement, even assuming the political agreement holds.
The central route through the strait remains closed, according to Intertanko's Phillip Belcher, who has estimated roughly 80 mines still need to be cleared. Vessels are instead routing through the narrower northern channel through Iranian waters and the southern channel through Omani waters, both lower capacity alternatives to the main shipping lane. The International Maritime Organization is separately coordinating the evacuation of more than 11,000 seafarers who have been stranded in the region for months, a logistical undertaking that is itself a sign of how far from normal conditions remain.
The Base Case
HDQ's base case is that the 60 day window produces enough partial progress, on nuclear program verification and on a longer term Hormuz administration framework with Oman, for Iran and the US to extend or formalize the current arrangement before the August expiry. The economic incentives on both sides point this way. Iran has gained sanctions relief on oil exports and access to a proposed 300 billion US dollar reconstruction fund, neither of which it wants to forfeit. The US has gained a politically valuable drop in gasoline prices that President Trump has explicitly tied to the deal's success.
Under this base case, the gradual normalization of shipping continues through the third quarter, oil prices stay rangebound in the low to mid 70s, and the geopolitical risk premium that built into commodity and currency markets earlier this year continues to unwind without a fresh shock.
The Tail Risk
The tail risk is not a return to active conflict. It is a stalled negotiation that leaves the 60 day commitment to expire without a replacement framework in place, reintroducing uncertainty about the strait's status even without new fighting. The early signs that this risk is non trivial are already visible. Follow on technical talks scheduled for Switzerland were postponed once already this month, with the White House citing unspecified logistics and Vice President Vance's office giving no firm rescheduled date. Iran has disputed US characterizations of what was agreed regarding nuclear inspections, the single most contentious issue the 60 day window is supposed to resolve.
The US Senate has also passed a resolution directing the president to remove military forces from the conflict, a domestic political signal that the appetite for continued US engagement, even in a de escalating posture, is not unlimited. None of this points to a collapse of the agreement. It points to a negotiation with real friction still ahead of it, running against a clock that the market is currently behaving as though does not exist.
What This Means for Canadian Energy
Canadian energy equities have been read through the lens of the broader oil price, and that lens currently shows a sector giving back the gains it built during the conflict, alongside what is now WTI trading near pre conflict levels. That read is correct for the base case. It is incomplete for the tail risk.
If the 60 day window expires without a successor framework, the more relevant historical parallel is not a return to the worst of the conflict, but a reversion to the kind of episodic, headline driven volatility that characterized oil markets through March and April, when prices whipped between renewed threat assessments and diplomatic progress reports. Canadian energy names with the lowest breakeven costs and the least balance sheet leverage are best positioned to weather that kind of volatility without a fundamental change to their investment case, which is a different risk profile than producers priced purely on the assumption that the de escalation trade is finished.
Daily transit figures before June 17 are estimated from reported near total halt conditions. The central shipping channel remains closed pending demining, with traffic routed through narrower northern and southern alternatives.