Oil Steady, Market Awaits Clarity on Hormuz Reopening
Oil prices held steady after their biggest drop in more than two weeks, as traders, shipping companies, and producers awaited details of the US-Iran deal aimed at fully reopening the Strait of Hormuz. Brent traded below US$83/barrel after dropping nearly 5% on Tuesday, while WTI hovered around US$81/barrel. The interim agreement is scheduled to be signed in Switzerland on Friday, but Washington and Tehran have not yet released the official text of the memorandum.
President Donald Trump confirmed Hormuz would reopen on Friday and said the passage would be toll-free. However, the market remains cautious as industry players need technical certainty before shipping resumes normal operations. Gulf energy officials have received numerous inquiries from buyers about whether crude oil can return to the strait, while shipping companies and traders are still awaiting clarity on security, operational regulations, and the status of transit fees.
The Strait of Hormuz is crucial, as it carried about a fifth of the world's oil supply before the war. Therefore, reopening the waterway could increase supply and ease pressure on energy prices. However, normalization is not expected to happen quickly. Raymond James analyst Pavel Molchanov estimates that oil supplies will return to pre-war levels by the end of July at the earliest, as logistical hurdles remain to be resolved.
Morgan Stanley cut its oil price forecast following the deal announcement. Dated Brent is now expected to average US$90/barrel in July–September, down from its previous projection of US$100, while its fourth-quarter outlook was cut to US$80. The bank sees 50% of production returning by September and 80% by December, slightly earlier than previously estimated.
However, some institutions remain cautious. Kpler data shows nearly 300 loaded vessels are still waiting to exit the Persian Gulf, with a similar number of empty vessels waiting to enter the region. RBC Capital Markets believes it will take months to approach pre-war flow levels. This suggests the oil market is not yet fully out of supply risk, although war premiums are beginning to diminish.
Fundamentally, the opening of Hormuz could reduce the risk of energy inflation and ease pressure on central banks, including the Federal Reserve, which is assessing the direction of interest rates this week. However, as long as the details of the agreement, shipping security, and the recovery of export volumes remain unclear, oil prices remain volatile. The next market focus will be on Friday's signing, actual ship flows, insurance responses, and supply recovery data from the Gulf.
5 key points:
- Brent stable below US$84/barrel, WTI around US$81/barrel.
- The market awaits the official text of the US-Iran agreement on Hormuz.
- Supply normalization is not expected to occur immediately.
- Nearly 300 loaded vessels are still waiting to exit the Persian Gulf.
- The opening of Hormuz could ease energy inflation, but technical risks remain significant. (asd)*
Source: Newsmaker.id
