Brent crude oil futures could fall to $80 per barrel by year-end if the Strait of Hormuz remains open, according to CBA analyst Vivek Dhar. Front-month Brent futures dropped 3.9% to $83.90 per barrel Monday, while WTI crude fell 4.5% to $81.07. The declines follow Iran and the US reaching an interim peace agreement.

Dhar notes that oil flows through the Strait of Hormuz need only recover to 60%-70% of pre-war levels to restore pre-war oversupply expectations. This assumes exports can resume quickly through the critical waterway that normally transports one-fifth of the world's oil supply. The analyst's forecast incorporates existing pipeline bypasses and non-OPEC+ supply growth.

XS.com senior market analyst Antonio Di Giacomo calls the potential agreement's reopening of the Strait of Hormuz one of its most significant aspects. Restored crude flows would substantially reduce supply shortage fears and improve global energy market stability outlook. Both benchmarks are now trading near their lowest levels since October.

The price drops signal markets are pricing in normalized Middle East supply routes. Investors are unwinding risk premiums built up during recent tensions, though volatility remains elevated given ongoing geopolitical uncertainty in the region.