Key facts
- Dubai and Murban crude futures have flipped to contango.
- The U.S. and Iran have reached an agreement to end the war, which will reopen the Strait of Hormuz.
- Analysts warn that the crude market will not return to normal for months.
- Logistical hurdles and rising demand are expected to keep supply pressures high.
- Brent crude is trading around $81 a barrel, up 12% from late February levels.
Middle East crude futures have flipped to contango, a market structure indicating ample supply, driven by hopes of a U.S.-Iran deal that would reopen the Strait of Hormuz. However, energy analysts caution that a return to normal oil market conditions will take months, citing logistical challenges in bringing supply back online and anticipating a surge in demand during the summer.
Despite the resolution of the conflict and the impending reopening of the Strait of Hormuz, oil prices remain elevated. Brent crude, the international benchmark, was trading around $81 a barrel, a 12% increase from late February levels. The Energy Information Agency forecasts oil prices to average $88 a barrel in 2026, while Goldman Sachs estimates prices to end the year around $80 a barrel.
Energy research firm HFI Research anticipates continued disruptions, estimating that tankers will not reach the Persian Gulf until mid-June at the earliest and that crude production will take about three months to fully return. Bob McNally of Rapidan Energy Group predicts ships will move through the Strait of Hormuz by the end of June, but notes that longer-term structural damage from the war will take many months to resolve as nations restart production. He also anticipates oil reserves will continue to drain as countries rebuild strategic reserves, and expects Brent crude to potentially exceed $100 a barrel by July or August due to pent-up demand and reserve topping.
Jeff Currie, a commodities strategist at Carlyle Group, suggests that approximately 60 million barrels of crude currently held in the Persian Gulf could be released once the Strait reopens. However, he points out the lack of a long-term solution for restoring lost supply, noting that countries like Kuwait, Qatar, and Iraq may take years to recover due to damaged infrastructure. Currie also expects shipping insurers to be hesitant to cover tankers in the Persian Gulf, estimating a return to normalcy will take months, not until the end of the year.
Mohamed El-Erian, a senior advisor at Carlyle Group, highlighted the potential for long-term damage to energy markets from the war, stating that while the peace deal is good news, it is not enough to fully resolve the issues.