Key facts
- Oil prices fell below $80 per barrel as traders anticipate the reopening of the Strait of Hormuz.
- Strategic oil reserves in OECD countries have reached their lowest point since 1990.
- The IEA has warned that a swift recovery in oil supplies is unlikely despite a potential US-Iran peace deal.
- The IEA has lowered its global oil demand forecast for 2026.
- European natural gas prices traded below €42 per megawatt-hour.
Oil prices have fallen below $80 per barrel amid growing confidence that the Strait of Hormuz will reopen, following a framework peace deal between the US and Iran. This potential reopening is seen as crucial for ending the global energy crisis, according to the International Energy Agency (IEA).
The IEA noted that strategic oil reserves in advanced economies have dropped to their lowest level since 1990, as governments have tapped emergency stockpiles to offset disruptions caused by the Gulf conflict. The agency has also lowered its global oil demand forecast for 2026, predicting a decline in consumption due to higher fuel prices and supply disruptions.
Despite the optimism surrounding the peace agreement, the IEA cautioned that a recovery in oil supplies may not be immediate, citing significant obstacles such as the clearance of mines and ongoing disruption to shipping routes. European natural gas prices also traded below €42 per megawatt-hour.
Analysts remain cautious due to persistent hurdles in negotiations, including Iran's nuclear program. However, the hope is that the agreement will provide a long-term solution to the conflict that has contributed to global inflation. Questions also persist regarding the speed at which regional production can recover, particularly for liquefied natural gas from Qatar's Ras Laffan complex.