Oil Prices Fluctuate as U.S. and Iran Pursue Peace

Global oil markets are experiencing prolonged instability following a war involving the United States, Israel, and Iran. The conflict effectively closed the Strait of Hormuz, which typically handles 20% of global oil and gas traffic, leading to increased insurance costs and longer transit routes. Major production facilities across the Middle East sustained damage that experts warn may take years to repair.

Oil prices recently dipped toward $90 per barrel as the White House expressed optimism regarding a potential agreement to end the war. Brent crude futures fell to $94.49 and West Texas Intermediate dropped to $90.59. In response to potential deals, Iran indicated it might allow vessels through the Omani side of the Strait of Hormuz. However, the United States military reported that maritime trade to and from Iran remains at a complete standstill due to a blockade on Iranian ports, and Treasury Secretary Scott Bessent announced that sanctions waivers for Iranian and Russian oil will not be extended.

Despite the brief price dip, analysts warn of a looming supply crisis. Nigel Green of deVere Group noted that the physical market operates with a delay and that current sentiment-driven moves do not reflect tightening supply. This physical tightness has already manifested in Sri Lanka, where some crude barrels reportedly sold for nearly $200. Market analyst Harsh Gahlaut suggests that prices are likely to remain above $80 per barrel due to inventory rebuilding and supply chain lags, with full normalization potentially taking three to four months.