US and Iran Agree on Strait of Hormuz Mechanism After Switzerland Talks

US Vice President JD Vance and Iranian officials concluded 18 hours of talks in Switzerland on June 22, agreeing on mechanisms to keep the Strait of Hormuz open and a ceasefire in Lebanon, according to a joint statement from mediators Pakistan and Qatar. The agreement sent WTI crude oil prices down more than 2% to $74.66 per barrel in afternoon trading.

The talks, reported by AP News, produced what mediators described as "encouraging progress," including a 60-day roadmap toward a final deal and a high-level committee to oversee technical discussions on nuclear issues, sanctions, and dispute resolution. A communication line was established to prevent incidents in the Strait, while a de-confliction cell will oversee the Lebanon ceasefire.

The diplomatic accord comes after Iran shut the Strait of Hormuz following the US-Israeli attack on February 28, 2026, a closure that had driven fuel prices higher. Over the weekend, 71 confirmed vessel transits resumed through the waterway, compared to a pre-war daily average of 100-130 vessels, signaling a partial return to normal shipping traffic.

The next step in the process is a 60-day negotiation window set to begin following the Switzerland talks. A breakdown in technical discussions or a renewed closure of the Strait could reverse the current downward trend in oil prices before the CME settlement on June 23.