Oil will still cause volatility even with U.S.-Iran deal: Analysts
A driver buys gas at a Shell station in Miami on April 13, 2026.
Joe Raedle | Getty Images
Investors welcomed the prospect of a US-Iran peace deal on Monday, but oil price volatility is likely to continue in the near term as analysts warn energy markets now face a “geopolitical risk premium” after the war.
Global oil stocks, depleted by the prolonged closure of the Strait of Hormuz, “will need time to rebuild and are likely to fall further before new supplies begin to arrive from the Gulf,” according to a note from Westpac.
“While the easing of global tensions is welcome news, the devil is in the details and therefore uncertainty is likely to remain high,” the bank said.
Daniel Hynes, ANZ’s senior commodity strategist, told CNBC that the energy shock is “far from over” and added that he does not foresee shipping traffic in the Strait of Hormuz returning to pre-conflict levels in the foreseeable future.
“A difficult phase awaits us,” Hynes said Monday on CNBC’s “Access Middle East.” “This is going to be a very, very difficult recovery.”
He noted numerous pressures, including heavy declines in oil stocks, as well as mine risks in the Bosphorus and the maintenance and repair of ships stranded in the region.
“I suspect it could take weeks, if not a month or two,” Hynes added.
International comparison Brent crude oil August futures contracts were last seen at $82.82 per barrel, down 5.16%. WE West Texas Intermediate Futures July oil fell 5.61% to $80.03 per barrel on Monday, its lowest level since March.
Brent crude oil.
But Hynes warned that $80 would not be enough to rebalance the market over the next three to six months, adding that prices would likely hover around the “low $90s” in the third quarter.
“The market oversimplifies things,” he said. “Iran’s control over the Strait will essentially be an ongoing issue that the market will have to deal with. This will keep prices relatively high… The oil market now faces a geopolitical risk premium.”
Bart Melek, head of global commodity strategy at TD Securities, told CNBC’s “Squawk Box Asia” program that even if the flow in the Strait of Hormuz returns to normal immediately, 800 million barrels of stockpiles will still be lost in November.
Melek said higher oil prices are still “on the cards and all the inflationary effects that come with that,” but some big increases in oil prices could be avoided if China chooses to stop using its stockpiles at some point.
“The market is pretty relaxed that we’ve made a deal, but I think we’re not out of the woods yet,” he added.
HSBC Private Bank’s Global Chief Investment Officer and Premier Wealth Willem Sels said in a statement to CNBC’s “Squawk Box Asia” program that the economic effects of the conflict in the Middle East are already affecting the most vulnerable parts of the economy.
Sels added that “challenging economic data, particularly from countries in South Asia,” could cause further volatility.
