According to analysts, the temporary peace agreement forming between the US and Iran may not eliminate volatility in oil prices in the short term. The low levels of global inventories and the time it takes for new supply from the Persian Gulf to reach the market could continue to exert pressure on prices.
Westpac's assessment highlighted that after the prolonged closure of the Strait of Hormuz, global oil stocks have declined and rebuilding these inventories will take time. The bank noted that while the easing of tensions is a positive development, the uncertainty surrounding the details could keep market concerns high.
Bart Melek, head of global commodity strategy at TD Securities, said that even if flows return to normal today, about 800 million barrels of stock will have been lost by November. According to Melek, this situation could create renewed upward pressure in the market.
Melek stated that higher oil prices remain a strong possibility and could bring inflationary effects. However, he added that if China stops using its own stocks at some point, sharp price spikes could be somewhat limited.
Willem Sels, global investment director at HSBC Private Bank and Premier Wealth, said the economic impacts of the conflict in the Middle East are already being felt in the most vulnerable areas. Sels noted that weak economic data from the most affected countries, especially in South Asia, could cause renewed market revaluation fluctuations.
Asian markets found support from increased risk appetite as the US and Iran moved closer to an agreement to reopen the Strait of Hormuz. August Brent crude fell 4.87% to $83.06, while US crude dropped 5.71% to $80.03 per barrel.
Oil Supply and Inventories Will Be Decisive
Experts believe that despite the initial positive reaction to the agreement news, the key factor will be how quickly global inventories recover and how regularly shipments from the Gulf flow. Therefore, even if markets calm down, volatility is not expected to disappear completely.
Analysts commonly agree that the agreement alone may not be enough to stabilize prices permanently. Developments in the oil sector are expected to closely affect both energy markets and the inflation outlook in the coming period.
