Oil prices continued to decline on Wednesday, with the international benchmark Brent crude trading well below $80 per barrel for the first time since early March, as optimism grew following an interim peace agreement between the US and Iran that is expected to reopen the Strait of Hormuz by the end of the week.
The prospect of renewed shipping traffic through the strait has eased fears of prolonged disruptions to energy supplies from the Gulf, which is a major global source of oil and liquefied natural gas exports.
The strategic maritime route has been effectively closed since the Iran war began on 28 February, at one point pushing Brent prices close to $120 per barrel and driving global price increases.
US President Donald Trump said on Monday that the strait would be fully reopened by Friday and would operate without transit charges.
Brent crude for next-month delivery was trading at $78.37 per barrel at around 7 am CET, while the US benchmark West Texas Intermediate (WTI) stood at $75.45 per barrel at the same time. European natural gas prices were also lower, trading below €42 per megawatt-hour on Wednesday morning.
According to the International Energy Agency (IEA), the Iran war and the de facto closure of the Strait of Hormuz have caused the largest supply disruption in the history of the global oil market.
Brent prices have fallen sharply from levels above $100 seen a few weeks earlier, dropping more than 33% over the past month as market expectations shifted rapidly. However, analysts note that it may still take months for the energy sector to return to full operational capacity.
Many analysts remain cautious, pointing out that significant challenges still exist in negotiations, including the future of Iran’s nuclear program. Despite this, some market participants on Wall Street view the agreement as a potential long-term resolution to a conflict that has contributed to global inflation.
Questions also remain regarding how quickly regional production can recover. In liquefied natural gas markets, attention is focused on Qatar’s Ras Laffan industrial complex, the world’s largest LNG export hub, following reports of significant damage to facilities there.
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