Oil prices fall on Iran deal, but whether they go much lower ‘is highly questionable’
Oil prices have fallen following reports of a U.S.-Iran deal to reopen the Strait of Hormuz, but analysts warn further declines may be limited due to lingering supply constraints and cautious market expectations. Stocks rose sharply on the news, though traders remain divided on how quickly energy markets will normalize. Brent crude dropped to $79.99, while WTI also eased, but experts say full supply restoration could take months.
What changed
Prices fell further Monday as traders assessed the deal’s impact, but uncertainty over Hormuz transit resumption and supply recovery timelines tempered expectations for deeper declines.
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Oil prices dip on Iran deal but deeper falls uncertain as supply recovery lags
confidence 88%Oil prices have fallen following reports of a U.S.-Iran deal to reopen the Strait of Hormuz, but analysts warn further declines may be limited due to lingering supply constraints and cautious market expectations. Stocks rose sharply on the news, though traders remain divided on how quickly energy markets will normalize. Brent crude dropped to $79.99, while WTI also eased, but experts say full supply restoration could take months.
What's confirmed:
- Brent crude futures fell around 3.15% to $79.99 as of Monday morning, marking a sharp drop on hopes of a U.S.-Iran deal to reopen the Strait of Hormuz.
- Oil prices have declined moderately since Friday, when initial reports of a potential Iran deal emerged, with WTI and Brent both easing on expectations of reduced geopolitical tensions.
- Energy experts and analysts, including Morgan Stanley, caution that oil and gas supplies could take months to return to normal even if the Strait of Hormuz reopens, due to damaged infrastructure and tight global supplies.
- Tanker industry executives remain cautious about the resumption of Hormuz transit, suggesting shipping traffic and crude exports may not quickly return to pre-conflict levels.
- Stock markets, including the Dow, rose significantly on Monday, with the Dow jumping 600 points to a fresh record, reflecting investor optimism about the potential end to energy market disruptions.
- Analysts warn against expecting a dramatic drop in oil prices, with one describing further declines as 'highly questionable' due to underlying supply tightness.
Still unconfirmed:
- Former President Trump claimed oil prices would drop 'like a rock,' though analysts suggest the decline may be more gradual, 'like a feather.'
- Some market observers speculate stocks could rise further if Hormuz reopens fully, though no concrete evidence of accelerated transit has been reported.
- Unconfirmed reports suggest damaged infrastructure in the region may delay full supply restoration beyond initial expectations.