Commerzbank’s commodity team, led by Barbara Lambrecht and colleagues, argues that Brent has fallen back below USD 100 as markets price in a potential Iran deal, but a rapid normalization of Gulf exports is unlikely. Mine clearance, infrastructure damage and tanker capacity imply a staggered recovery, while US WTI-driven drilling remains too modest to trigger a strong production response in coming months.

Gulf normalization and US shale response

"Hopes for a framework agreement between the US and Iran to end the conflict have been somewhat dampened by the recent US strikes on Iranian missile sites and vessels that were allegedly attempting to lay mines in the Strait of Hormuz. Nevertheless, confidence remains high among market participants."

"Consequently, a barrel of Brent crude is trading below USD 100 again, costing a good 10% less than it did just a week ago."

"According to the IEA, the market will not return to equilibrium before the end of the fourth quarter."

"This is also in line with the forecast by the US Energy Information Administration, which expects production to stagnate at current levels in the coming months."

"The recent rise in drilling activity does not point to a significant expansion of US oil production."

"For that to happen, the number of oil rigs would have to increase much more substantially."

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