ING’s commodities team of Ewa Manthey and Warren Patterson report that Oil prices have dropped sharply, with Brent and WTI falling well below $100 as a US–Iran two‑week ceasefire eases supply disruption fears. They highlight the role of the Strait of Hormuz reopening, weaker refined products, bearish US inventory data, and sharply reduced OPEC output in shaping the near‑term outlook.

Ceasefire and Hormuz drive sharp selloff

"OPEC supply fell sharply in March, according to preliminary Bloomberg survey data, with production down by around 7.6mb/d month‑on‑month to a multi‑decade low of 22.1mb/d, reflecting war‑related disruptions and curtailed exports through the Strait of Hormuz."

"Iraq posted the largest decline, with output falling by 2.8mb/d to 1.6mb/d. Saudi Arabia’s production dropped by 2.1mb/d to 8.4mb/d, while UAE output fell by 1.4mb/d to 2.2mb/d, partly cushioned by pipeline routes bypassing the strait. Reopening the Strait of Hormuz could allow some lost production to return in the coming weeks, though a full normalisation will be gradual."

"Further price direction will hinge on whether talks translate into a durable agreement and a sustained normalisation of flows through the strait, with volatility likely to persist during negotiations later this week."

"US inventory data added to the bearish tone. The API reported a 3.7mb build in US crude stocks last week, well above expectations for a 0.78mb increase. In contrast, refined product balances were more supportive, with gasoline and distillate inventories falling by 4.0mb and 0.6mb, respectively. The EIA inventory report is due later today."

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