Spot premiums for crude and some refined products in Asia have fallen back to pre-war levels following a U.S.-Iran deal to end the Middle East conflict, though caution about how soon normal shipping can resume is providing a floor for oil markets.
Goldman Sachs and Morgan Stanley cut their oil-price forecasts with Persian Gulf flows expected to recover to prewar levels sooner than anticipated.
Risks to oil price assumptions in the event of a finalized peace deal are two-sided but the Goldman Sachs report notes that the global economy adjusted very flexibly to the largest oil production shock in history
Brent crude and WTI prices were falling again as President Donald Trump said the Strait of Hormuz could reopen as soon as Friday.
Investors seek further clarity on U.S.-Iran peace deal
U.S. stock futures were flat and oil slipped in early European trade as investors awaited further details on terms of the U.S.-Iran peace deal.
Oil prices rebounded on Tuesday on concerns about the lack of details in a preliminary agreement ending the war between the U.S. and Iran and the realization the resumption of supply through the key Strait of Hormuz may take longer than thought.
Oil futures rose in early Asian trade on a likely technical recovery after futures settled overnight at their lowest level since March 4.
U.S. average retail gasoline prices dipped below $4 a gallon for the first time since mid-April, as optimism grew that a preliminary deal between the U.S. and Iran would lead to the reopening of the Strait of Hormuz, a critical passageway for global oil supplies.
The U.S. Strategic Petroleum Reserve has fallen to the lowest level in more than 40 years, according to the Department of Energy. Oil executives have warned that global inventories are rapidly depleting due to the supply disruption triggered by the Iran war.
The U.S. and Iran have reached a tentative deal to extend their ceasefire by 60 days and reopen the Strait of Hormuz, but it will take an excess of global crude supplies and lower shipping costs for the market to see any semblance of normality.
Wall Street is cheering an end to the war in Iran. It may be a while before investors get an end to war-related uncertainty.