Hormuz reopens and Brent sheds $22 in a month

The supply shock that pushed May’s CPI above 4% is unwinding. On June 18, a U.S.–Iran memorandum of understanding ended the conflict that had kept the Strait of Hormuz effectively closed since late February, and shipping traffic through the strait has increased since. Brent crude averaged $85 per barrel in June, according to the EIA’s July outlook. That is down $22 from May and $32 below the April peak.

Pump prices lag crude, so the consumer relief arrives on a delay. The EIA projects retail gasoline averaging $3.80 per gallon in the third quarter, down from $4.21 in the second, with further declines toward year-end.

The round trip, in one chart

The shock arrived through the gas pump and the wire room at the same time. The unwind will leave through both, on different clocks.

What the unwind changes for banks

For credit, an energy retreat eases the household cash-flow squeeze that was starting to show in transaction patterns. For AML programs, it is the mirror image of the spring. Monitoring thresholds re-baselined for energy-driven volatility will need re-tuning again as volumes normalize, or yesterday’s calibration becomes today’s blind spot. Year-over-year comparisons also stay distorted well into 2027. June’s level is calmer, but it is still far above last summer’s.