Damaged energy infrastructure and storage constraints may keep oil prices elevated for months, even if US-Iran tensions ease.
Oil prices remain supported by lingering supply risks, despite renewed hopes for a US-Iran agreement. Recent optimism over a potential deal briefly pushed prices lower, but structural damage to Middle Eastern energy facilities and storage constraints could sustain upward pressure for months.
Earlier expectations of escalating conflict had driven prices higher, but reports of a possible breakthrough—including a Pakistani official’s visit to Iran and US statements on final-stage negotiations—triggered a pullback. However, production curtailments and full storage facilities in key oil-producing nations may delay a return to pre-conflict output levels.
The market reaction reflected shifting sentiment, with oil prices retreating and the US dollar weakening on deal optimism. Still, analysts warn that supply disruptions could persist, keeping prices elevated even if the Strait of Hormuz reopens.