Even if a peace deal is reached between the US and Iran, the physical oil and gas market would remain tight, and spot prices may stay higher.
“A deal announcement would move futures further immediately, in fact, even the potential of a deal is already triggering a decline in oil prices,” Paola Rodriguez-Masiu, chief oil analyst at Rystad Energy, said in a commentary.
Futures react quickly, the physical market lags
However, the physical market does not run on political timelines. Even under an optimistic scenario involving a 30-day phased reopening of the Strait of Hormuz, meaningful volume recovery would happen in June at the earliest, with processing port arrivals lagging by an additional four to six weeks after that.
Brent crude oil prices extended sharp declines and fell below $100 per barrel on Thursday as hopes for a gradual resumption of flows through the Strait of Hormuz were raised after Iran reviewed a new US proposal aimed at ending the conflict.
The Brent contract was last seen at $97 per barrel.
According to a report from Al Arabiya, understandings had reportedly been reached to ease the US blockade in exchange for a gradual reopening of the Strait of Hormuz.
Separately, Channel 12 reported that Iran had agreed to transfer its stockpile of 60% enriched uranium to a third country as part of ongoing discussions.
However, other reports indicate that the issue of uranium transfers remains unresolved and highly contentious in negotiations.
“The sell-off partly unwinds the conflict-driven rally in energy prices…,” Warren Patterson, head of commodities strategy at ING Group, said in a note.
Rystad Energy, on the other hand, said that the current peace framework involves a moratorium on Iranian nuclear enrichment, sanctions relief, and a 30-day negotiating window.
The framework reflected a structured pause, not a resolution, a difference that is immensely significant when considering physical barrels, the Norway-based energy intelligence agency said.
Rystad Energy still estimates that a meaningful volume recovery will occur within six to eight weeks after a credible access condition is established.
Physical flows are anticipated to return to 80–90% of pre-disruption levels by July, with processing port arrivals lagging by an additional four to six weeks.
The re-establishment of commercial trust will take time, requiring that transit insurance markets adjust their pricing and vessel operators secure reliable, long-term access, according to Rodriguez-Masiu.
Shipping delays and market normalisation
“The six-to-eight-week lag between credible access conditions and real flow normalization is not a conservative estimate, it is a structural feature of how shipping markets work. Global markets should not mistake a ceasefire headline for a supply headline,” she said.
Although the futures market is immediately reflecting the price impact of a potential deal, the physical market will require significantly more time to reach an agreement, Rystad’s analysts added.
Several key indicators differentiate the current situation from previous instances where US proposals were discussed but ultimately failed.
Following the start of the war on February 28, Iran’s Foreign Minister Araghchi visited Beijing for the first time earlier this week.
China’s Foreign Minister Wang Yi publicly called for a comprehensive ceasefire and the immediate reopening of the Strait of Hormuz.
Hosting Iran’s top diplomat while simultaneously expressing “deep distress” marks a significant shift in Beijing’s diplomatic stance, said Rystad.
“China’s leverage over Iranian oil revenues gives it tools Washington does not have, and there is now direct evidence it is deploying them,” the agency added.
In a notable shift of operational policy, US President Donald Trump has explicitly suspended the US’ practice of escorting commercial ships through the Strait, aiming to create an environment conducive to a deal.
The lack of comment from the Islamic Revolutionary Guard Corps regarding the latest US proposals is a significant analytical point, unlike their reactions to previous offers.
Beyond standard navigation statements, there has been no substantial political or official response.
Rystad Energy views this silence as an indicator that the proposal is being seriously considered at a level that necessitates careful handling before any public declaration.
Energy markets are likely to remain headline-driven. A deal that restores traffic through Hormuz would reduce the supply-risk premium, but any delay or setback in talks could quickly put upward pressure back on oil and gas prices.
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