Oil prices have dropped significantly, marking the largest decline since the Iran war began in late February. Brent crude for June delivery and WTI for May delivery have fallen to the mid-$90s per barrel, alongside a decrease in prices for refined products. A temporary two-week ceasefire between the United States and Iran was agreed on Wednesday, allowing safe passage for ships through the Strait of Hormuz. This ceasefire aims to create a period for finalising a permanent settlement, with formal negotiations due to start in Pakistan.
Analysts at Standard Chartered warn that this price drop might be too steep, suggesting that any signs of escalating conflict could quickly raise prices again. The firm had previously forecast Brent crude at $98 per barrel and WTI at $92.50. As of 14:30 ET, Brent was trading at $95.57 and WTI at $96.99 per barrel.
Standard Chartered noted that oil prices are influenced by the ongoing Middle East conflict, which has led to reduced shipping through the Strait of Hormuz and limited production in the Gulf. They predict that prices will likely remain $10-20 per barrel above pre-conflict levels due to strategic stockpiling and production delays.
As the situation develops, Iran continues to control oil transit through the strait, and uncertainty remains about safe passage for vessels. Meanwhile, LNG exports, particularly from the United States, are expected to increase significantly by 2026, potentially offsetting Middle Eastern supply disruptions.
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