Oil prices drop sharply on US-Iran agreement easing Strait of Hormuz tensions, though analysts warn security risks could resurface quickly.
Brent crude prices have declined more than USD30 per barrel since early May, trading below USD80 after a US-Iran deal eased fears over the Strait of Hormuz. Markets appear to be pricing in a smooth reopening, but delays or partial implementation could revive security risk premiums.
OCBC maintains its end-2026 Brent forecast at USD80, projecting a gradual decline toward USD60 by 2027-28. Near-term supply disruption risks may limit further price drops, with recent incidents raising doubts about the deal’s durability.
Overnight, crude prices edged higher after a cargo ship strike in the Strait of Hormuz caused significant damage. Reports suggest Iran may be involved, though unconfirmed, highlighting lingering geopolitical fragility.