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🇳🇬 Nigeria /Economy & Trade

Oil Falls Below $80 as World Awaits Crude Flows from Strait of Hormuz

From ThisDay · () English

Summarized and contextualized by DistantNews.

At a glance

News Named sources Context piece
  • Crude oil prices dropped below $80 a barrel for the first time since March, driven by expectations that a US-Iran deal will resume oil flow through the Strait of Hormuz.
  • Brent crude fell 5.5% to $78.58 and WTI dropped 6.3% to $75.66 after the US and Iran agreed to extend a ceasefire and reopen the strait, which had been effectively closed since late February.
  • Analysts anticipate a gradual return to pre-war shipping levels, though some express caution about sea mines and the need for clear evidence of shipping confidence.

Crude oil prices have fallen below $80 a barrel, a level not seen since March, as traders anticipate the resumption of oil flows through the Strait of Hormuz following a US-Iran deal. Brent crude, the international benchmark, saw a 5.5% drop to $78.58, while the US benchmark, West Texas Intermediate (WTI), fell 6.3% to $75.66.

Markets clearly welcome the latest development, although how quickly traffic through the strait can normalise remains to be seen.

— analysts at UBScommenting on the market's reaction to the US-Iran deal and the potential return of oil flows.

This development follows an agreement between Washington and Tehran to extend their ceasefire and reopen the Strait of Hormuz, which had been effectively closed since late February after weeks of negotiations. Middle Eastern oil prices have also declined significantly since the peace deal was announced. For instance, Abu Dhabi's Murban crude dropped to $72.74 a barrel, a mere 49 cents above its pre-war price, after having surged to $160.50 in March.

Two Iranian tankers, Hero II and Diona, have already sailed out of the Gulf of Oman, passing the nominal US blockade line. While their final destinations are unknown, they appear to be heading southeast. This marks the first indication of Iranian oil moving without challenge from the US military since restrictions began.

Given worries about sea mines in the waterway, markets will look for clearer evidence that shipping companies and insurers have sufficient confidence to traverse the strait.

— analysts at UBSexpressing caution about the normalization of shipping traffic through the Strait of Hormuz.

Analysts at UBS noted that markets welcome the development but remain watchful about the speed of traffic normalization through the strait. They highlighted that concerns about sea mines could influence shipping companies' and insurers' confidence in traversing the waterway. Goldman Sachs has revised its oil price forecast downwards, now expecting Brent to trade at $80 a barrel in the final quarter of 2026, a $10 reduction from its previous prediction. The bank anticipates Persian Gulf exports normalizing to pre-war levels by the end of July.

While full details on the agreement are unclear, we now assume that Persian Gulf exports normalise to pre-war levels by the end of July (vs end of August previously).

— analysts at Goldman Sachsexplaining their revised oil price forecast following the preliminary US-Iran agreement.
DistantNews Editorial

Originally published by ThisDay. Summarized and contextualized by our editorial team with added local perspective. Read our editorial standards.

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