Brent crude is on track for a 19% monthly decline—the steepest since 2020—as reports of a potential US-Iran ceasefire extension rattle energy markets. On Friday, Brent dropped toward $92 a barrel, while West Texas Intermediate fell near $87, both heading for their sharpest weekly falls in months. The slide follows news that Washington and Tehran have drafted a 60‑day truce extension, pending President Trump’s approval.
The Strait of Hormuz, a critical chokepoint for global oil shipments, remains heavily restricted due to the conflict. Even an Axios report that shipping would become “unrestricted” under a deal failed to fully reassure traders. Vice President JD Vance said it was “too early to know when or if” an agreement would be reached, while Iran claimed it was rejecting repeated US requests for a deal.
Analysts warn that any truce would not quickly restore supply. Mines must be cleared, damaged infrastructure repaired, and shut‑in fields restarted—a process that could take months. TD Securities strategist Ryan McKay cautioned that “flows would remain heavily constrained due to the time lag of tanker travel and time to get production back online,” potentially losing another 1 billion barrels during recovery. US crude stocks at Cushing fell for a fifth consecutive week to 23 million barrels, nearing the minimum operating level, while distillate inventories hit a two‑decade low.
Commerzbank revised its Brent forecast upward, now expecting $90 per barrel by September and $85 by year‑end, up from $80. The bank assumes the Strait remains closed until early August, with Iran given 30 days for demining. Even after reopening, production and tanker logistics will keep prices above pre‑war levels. European natural gas prices similarly remain elevated, as LNG flows are disrupted and potential damage to Qatari facilities could reduce capacity for years.
The International Energy Agency reported global energy investment will hit a record $3.4 trillion this year, driven by electrification and data‑center demand. Yet oil sector investment is declining, while gas‑fired power plant spending hit a 25‑year high. Broader economic concerns—higher‑than‑expected US inflation and slower GDP growth—may also keep the Federal Reserve from cutting rates, adding pressure on demand.
