Iran Conflict Update: After the Signing
The U.S. and Iran signed a memorandum of understanding (MOU) on June 17 and 18, and the agreement is real: the fighting has stopped, the naval blockade has been lifted, and the Strait of Hormuz is reopening. What matters now is what the deal actually contains, what it leaves unresolved, and what it means for markets and portfolios going forward.
What the MOU Actually Contains
The signed memorandum is a 14-point framework, not a final treaty. It includes a broad ceasefire covering all fronts, U.S. sanctions relief, the unfreezing of Iranian assets worth tens of billions of dollars, and Iranian commitments to place enriched uranium under international supervision. It also launches a 60-day window for follow-on nuclear negotiations involving the U.S., Iran, and European partners including the U.K., France, and Germany.
What is not in the agreement matters as much as what is. Iran’s ballistic missile program is not addressed. Iran’s support for regional militias is not addressed. Israel is not a party to the deal and has made clear it will act unilaterally if it believes its security requires it. Israel’s prime minister said publicly that Israel and the U.S. do not always see eye to eye on this outcome, and Israeli forces continued striking targets in southern Lebanon in the hours after the agreement was announced. The ceasefire between the U.S. and Iran is in place. The broader regional picture is still unsettled.
The Strait Is Opening, but Shipping Is Moving Cautiously
Commercial traffic is beginning to flow through the Strait again, but the shipping industry is moving carefully. Mines laid during the conflict, the potential for residual drone and missile threats, and months of crew fatigue have made operators cautious about returning to normal routing immediately. A number of vessels that had been anchored and waiting in the Gulf are beginning to move, but confidence in full operational normalcy is not yet widespread.
The supply picture behind this remains significant. Estimates of stranded oil that built up during the conflict range from roughly 880 million to 1.4 billion barrels worldwide, which is more than any supply overhang in modern history. Gulf producers including Saudi Arabia, Iraq, Kuwait, the UAE, and Qatar shut in a combined 9 to 10 million barrels per day at the peak of the conflict. That oil needs to move, and the infrastructure to load and transport it is largely intact. The release of this backlog over the coming weeks and months is the central dynamic now shaping the oil market.
Where Oil Goes From Here
Brent crude dropped sharply on the initial deal announcement and is trading well below its wartime highs. Major bank forecasts for the rest of the year cluster in the $75 to $90 range, reflecting an assumption of orderly normalization. The actual dynamics may push prices lower than that range suggests.
The demand side is as important as the supply side in understanding where prices land. Refiners and importing nations know more oil is coming, and the rational response is to draw down existing inventories before restocking rather than buying at current prices. China already holds record strategic reserves built up during the lower price environment of 2024 and 2025. Japan, South Korea, and India released strategic reserves during the conflict and are in no hurry to rebuild at elevated prices. Buyers have leverage. Sellers need to move product that has been sitting in storage or on tankers for months.
If oil moves toward the lower end of the range or beyond it, the downstream effects are meaningful. Every $10 decline in oil reduces gasoline prices by roughly 25 cents per gallon and takes a few tenths of a point off headline inflation. A sustained drop in crude would ease costs across diesel, freight, food, fertilizer, and petrochemical industries as well. The consumer benefit is real, even if the effects take a few months to work through the system.
The Risks That Remain
The most significant risk to this outlook is the same one we identified in our previous update: Israel. Israel was the lead military partner alongside the U.S. for the duration of the conflict and is not bound by the terms of the MOU. Israel’s prime minister has been direct about Israel’s willingness to act independently, and Israeli strikes in Lebanon continued through the weekend of the signing. Over the weekend, U.S. and Iranian delegations met face to face in Switzerland for the first round of follow-on talks, producing agreements on Strait of Hormuz communication protocols and a framework for addressing the ongoing conflict in Lebanon. Those talks concluded without a final resolution, and technical teams are continuing their work. If Israel were to launch strikes on Iranian targets, the ceasefire would be in serious jeopardy and oil prices could spike sharply.
The second risk is the 60-day nuclear negotiation window itself. The framework agreement is built on the premise that the harder questions, enrichment, missile capabilities, regional influence, can be resolved through follow-on diplomacy. Those are genuinely difficult issues, and the negotiating road ahead is not straight.
OPEC’s response also bears watching. Several OPEC members approved production increases for May and June rather than cuts, and the UAE formally exited the organization on May 1. Whether producers attempt to coordinate a defense of oil prices as supply returns to the market will matter for how far and how fast prices fall.
What This Means for Portfolios
None of this changes the way we are managing client portfolios. The conditions that rewarded diversification during the conflict are the same conditions that reward it now. Clients who held their positions through five months of war headlines, elevated oil prices, and inflation pressure are now positioned on the right side of what appears to be a meaningful easing cycle in energy costs.
Lower oil is a genuine tailwind for inflation and consumer spending. It does not, on its own, resolve the stickier parts of the inflation picture. Services inflation, shelter costs, and wages have been stubborn, and the Federal Reserve will need to see broader progress before adjusting rates. But the direction of energy prices matters, and the direction has shifted.
The situation continues to evolve. We are watching the implementation of the MOU, the pace at which shipping returns to normal through the Strait, the behavior of oil prices as stranded supply comes to market, and the status of the 60-day nuclear negotiating window. If anything material changes that affects how we are thinking about client portfolios, we will communicate directly.
As always, if your own situation or goals have changed, we would welcome a conversation. Otherwise, the approach remains the same: stay invested, stay diversified, and let the plan do its work.
Disclosure
This material is provided by Gryphon Financial Partners, LLC (“Gryphon”) for informational purposes only. It is not intended as a substitute for personalized investment advice or as a recommendation or solicitation of any particular security, strategy, or investment product. Facts presented have been obtained from sources believed to be reliable, though Gryphon cannot guarantee their accuracy or completeness. Gryphon does not provide tax, accounting, or legal advice. Individuals should seek such guidance from qualified professionals based on their specific circumstances.