The cost of crude has become a real-time
barometer of the Iran war’s toll on the global economy.
·
Global
oil prices have fallen to their lowest levels since before the start of the Iran
war, providing relief to consumers,
businesses, and governments.
·
Brent
crude oil, the international benchmark, dropped
below $72 per barrel,
marking a major psychological milestone for energy markets.
·
During
the early phase of the conflict, oil prices surged to around $118
per barrel after Iran disrupted shipping through the
Strait of Hormuz, a
key global oil transit route.
·
Prices
began declining after:
o Cease-fire negotiations gained momentum
o Efforts were made to evacuate stranded
ships
o Shipping activity through the Strait of
Hormuz resumed
·
The Strait
of Hormuz handles about 20%
of global oil supply, making its stability crucial for energy
markets.
·
Maritime
traffic through the strait has increased:
o More than 330
vessels have passed through recently
o However, traffic remains below normal
pre-war levels
·
A
recent attack on a container ship by Iran and subsequent US retaliatory strikes
created fresh uncertainty, but markets largely remained calm.
·
Investors
believe that:
o A near-term agreement between the US and
Iran is possible
o Regular shipping through the strait is
likely to resume
o Increased oil supply could keep prices
under pressure
·
Analysts
noted that a single ship attack may not be enough to create a sustained rise in
oil prices unless there is a larger disruption.
·
Economic
experts cautioned that the effects of energy shocks may continue:
o Inflation pressures could take months to
ease
o Central banks may need time to respond
·
Lower
crude prices may not immediately reduce fuel costs for consumers because
gasoline prices usually adjust with a delay.
·
In the
United States:
o Gasoline prices fell to around $3.90
per gallon
o Prices remained about 30%
higher than before the war
·
Oil
exports from Persian Gulf countries increased:
o Nearly 15
million barrels per day recently
o Up from less than 10
million barrels per day in May
·
Rising
supply comes as global oil demand is expected to weaken, with the International
Energy Agency (IEA) projecting a drop of nearly 5
million barrels per day in Q2 2026,
partly due to reduced energy consumption during the conflict.
·
The
IEA suggested that:
o Falling demand
o Improved shipping prospects
o Higher supply
have contributed to the recent decline in oil prices.
·
Analysts
warned that a possible increase in production could create an oil surplus in
the future.
·
JPMorgan
Chase analysts projected that oil prices could fall into
the low $60s per barrel range in the second
half of 2027 if oversupply develops.
[ABS News Service/27.06.2026]
Oil
prices have fallen to levels not seen since before the war in Iran started, offering
relief to households, businesses and governments around the world.
The
slide this week in the price of Brent crude oil, the international benchmark, which
dropped below $72 a barrel on Friday, is also a significant psychological milestone.
As fighting flared, the commodity served as a real-time barometer of the war’s toll
on the global economy.
Oil
prices had soared as high as $118 a barrel in the early stages of the war, after
Iran effectively blocked ships from passing through the Strait of Hormuz, a vital
shipping route for crude oil. But they began to fall after efforts to negotiate
a cease-fire and evacuate ships trapped in the Persian Gulf. American and Iranian
officials agreed in mid-June to reopen the strait, through which about 20 percent
of the global supply of oil flows.
Traffic
through the strait has picked up markedly in recent days. Since the United States
lifted its naval blockade last week, more than 330 vessels have passed through the
strait, according to Kpler, a global maritime data firm. Only a handful of ships
braved the passage each day during the height of the conflict, but the recent upticks
in traffic have been, at most, about half of the typical daily volumes before the
war.
Iran’s
military struck a container ship in the strait on Thursday, jolting markets and
prompting U.S. retaliatory strikes on Iran on Friday. It wasn’t clear how traders
would react when oil markets reopen on Sunday.
But
the attacks were the latest setback for shipowners, which remain wary about operating
in the gulf, after periodic demands from Iran to follow its preferred route and
possibly pay fees for passage. President Trump has insisted that there would be
no tolls, insurance costs or charges for vessels traveling through the strait.
On
Friday, Iran’s foreign ministry reiterated that “safe passage through the Strait
of Hormuz is not guaranteed” for ships that do not first seek authorization from
Tehran to navigate the waterway.
That
did not appear to deter investors: Over the past 24 hours, prices have dipped below
the levels not seen since Feb. 27, the eve of the war in Iran, when Brent crude
settled at $72.48 a barrel.
It
would take something “much more meaningful” than an isolated ship attack to send
oil prices rising again for a sustained period, said Allen Good, director of equity
research at the research firm Morningstar.
“The
market continues to look through these flare-ups as it perceives Trump and the Iranians
as ultimately committed to a near-term deal and the opening of the strait,” Mr.
Good said. At the same time, a large amount of oil coming through the strait is
poised to hit the market all at once, putting downward pressure on prices.
Still,
the economic effects of energy shocks tend to linger,
said Ken Wattret, the vice president of global economics at S&P Global Market
Intelligence. He warned that it may take months for central banks to rein in inflation
caused by the shock. “We shouldn’t conclude that just because crude prices are back
where they were in late February that the impact on the global economy is over,”
he said.
Lower
oil prices may take time to trickle down to consumers. U.S. gasoline prices, which
tend to lag changes in oil prices, declined to $3.90 a gallon on Friday, according
to the AAA motor club, still some 30 percent above where they stood before the war
started.
“It’s
unlikely we’re going to immediately see much lower prices at the pump,” said Brett
House, a professor of economics at Columbia Business School. The United States,
he added, is heading into its peak summer driving season at a time when the government’s
oil reserves have been depleted because of the war.
Persian
Gulf countries are now exporting almost 15 million barrels of oil a day, up from
less than 10 million barrels a day in May, analysts at the International Energy
Agency, a multilateral organization in Paris, said in a report this week. They attributed
most of that uptick to increased shipping through the strait. (Gulf countries were
exporting almost 25 million barrels of oil a day prewar, most of that through the
strait.)
The
increase in oil supply comes at a time when global demand is expected to drop by
almost five million barrels a day in the second quarter of 2026 partly because consumers
scaled back their energy use during the conflict, the I.E.A. said.
“Prices
have since eased significantly as demand has fallen sharply, and on increased optimism
that a deal would be reached to enable more regular shipping flows through the strait,”
the analysts wrote.
The
agency is among those cautioning that a rebound in oil production may create a glut
next year that will make oil even cheaper. JPMorgan Chase analysts recently said
they expected the price per barrel to fall into the low $60s in the second half
of 2027.