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Gold Steady as Investors Await Details of US-Iran Deal, Fed Verdict
🇸🇦 Saudi Arabia /Crime & Justice

Gold Steady as Investors Await Details of US-Iran Deal, Fed Verdict

From Asharq Al-Awsat · () English

Summarized and contextualized by DistantNews.

At a glance

News Named sources Context piece
  • Global oil prices have fallen significantly following a preliminary US-Iran agreement, averting a feared worst-case scenario of $150 a barrel.
  • Brent crude is trading around $80 a barrel, with shipping through the Strait of Hormuz expected to resume, easing cost pressures for importing nations.
  • Experts caution that prices may not return to pre-war levels due to Iran's control over the Strait and potential damage to oil facilities, predicting a sustained range of $85-$90.

Global energy markets have breathed a sigh of relief as a preliminary agreement between the United States and Iran promises to reopen the vital Strait of Hormuz. This development has averted the specter of oil prices soaring to $150 a barrel, a level that threatened severe disruption to the global economy and various industries.

The current situation indicates that Iran controls 20% of global oil and gas supplies as a result of its closure of the Strait of Hormuz. Therefore, oil prices after the agreement must take into account a permanent price premium because of Iran’s control of the Strait of Hormuz.

— Mamdouh SalamehAn international energy expert commenting on the potential long-term impact of the US-Iran agreement on oil prices.

Brent crude has since fallen to around $80 a barrel, a substantial drop from the feared peak and an increase from its pre-war price. The resumption of shipping through the Strait of Hormuz is expected to lower costs for crude-importing countries, with potential ripple effects on the prices of other goods due to oil's fundamental role in production.

Stock markets have reacted positively, buoyed by the prospect of normalized shipping and easing commodity prices, which could bolster corporate earnings. However, international energy expert Mamdouh Salameh warns that a full return to pre-war price levels is unlikely. He argues that Iran's control over the Strait of Hormuz will necessitate a permanent price premium.

the volume of oil flowing through it will fall to half its pre-war level because of the damage sustained by oil production facilities in the Arabian Gulf.

— Mamdouh SalamehAn international energy expert discussing the expected impact on oil supply after the reopening of the Strait of Hormuz.

Salameh further predicts that even with the strait reopened, the volume of oil passing through will be halved due to damage to oil production facilities in the Arabian Gulf. He estimates repairs could take eight to 12 months, leading him to forecast that Brent crude will stabilize between $85 and $90 for years to come, rather than returning to the $60-$65 range.

For this reason, Brent crude will not return to its pre-war level of $60 to $65 a barrel, but will range between $85 and $90 for many years to come.

— Mamdouh SalamehAn international energy expert forecasting future oil price ranges.
DistantNews Editorial

Originally published by Asharq Al-Awsat. Summarized and contextualized by our editorial team with added local perspective. Read our editorial standards.

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