Danske Research Team reports that Brent crude fell as low as USD 92 per barrel after the US-Iran ceasefire, with Oil dropping below USD 100 as risk sentiment improved. However, they stress that sustained lower prices depend on a recovery in Oil and gas flows through the Strait of Hormuz, and warn that the ceasefire deal remains fragile and uncertain.

Ceasefire-driven drop faces flow uncertainty

"With Trump's deadline fast approaching, the US president announced a two-week ceasefire with Iran."

"This provided an imminent relief for markets, with oil prices collapsing below USD100/barrel, US yields falling by more than 10bp across the curve and EUR/USD rallying towards 1.17."

"Brent crude fell as low as USD92/bbl on the news, but the drop in prices is contingent on the pre-condition that traffic through the Strait of Hormuz resumes."

"For prices to stabilise at lower levels, oil and gas flows through the strait must pick up again, which remains uncertain."

"The deal looks fragile, particularly as Iran is allowed to charge fees on ships passing through."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)