International Oil Prices Dip Amid Easing Iran Tensions, But Risks Linger

International oil prices saw another decline on Friday, as traders increasingly anticipate a reduced likelihood of further conflict between the United States and Iran. Brent crude futures closed down 1.94%, settling at $93.09 per barrel, while U.S. West Texas Intermediate (WTI) crude futures fell 2.69% to $90.54 per barrel.

Despite the easing geopolitical tensions, analysts caution that significant risks to oil market stability persist. The passage through the Strait of Hormuz remains restricted, and regional tensions, particularly in Lebanon, continue to simmer. While some oil tankers have resumed passage through the strait, overall traffic is far below pre-conflict levels. Data indicates only four tankers successfully transited the strait earlier this month, a stark contrast to the pre-conflict average of approximately 130 vessels per day.

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The market is not expecting further escalation of the conflict. Even without a formal agreement, investors believe the situation is moving in a direction of de-escalation.

Analysts note that oil prices are currently holding above $90 per barrel, indicating that while the market anticipates potential peace talks, there is still a high degree of vigilance regarding supply risks. Should negotiations falter, crude oil prices could rapidly surge back above $100 per barrel. Meanwhile, Iran's oil exports have worsened, with May exports falling to a nearly six-year low due to U.S. maritime blockade actions severely limiting tanker access. Weak demand from China has further suppressed Iranian crude prices.

The Organization of the Petroleum Exporting Countries (OPEC) reiterated its forecast for global oil demand to increase by 1.2 million barrels per day in 2026, even amidst ongoing Middle Eastern conflicts and disruptions in the Strait of Hormuz. However, factors such as slower-than-expected inventory drawdowns, rerouted export routes, and slowing demand are limiting further price increases for Brent crude, according to Commerzbank.

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OPEC still maintains its forecast for global oil demand to increase by 1.2 million barrels per day in 2026, even amidst ongoing Middle Eastern conflicts and disruptions in the Strait of Hormuz.