ING analysts Warren Patterson and Ewa Manthey say Brent has fallen below $90/bbl on renewed hopes for a ceasefire and resumption of energy flows through the Strait of Hormuz. They caution that any deal could be fragile and stress that, without resumed flows by late July, tightening inventories and stronger seasonal demand could push Brent towards $120-130/bbl.

Geopolitics and supply risks drive outlook

"The price action in oil markets is no surprise, with Brent falling below $90/bbl on the latest developments. The relatively benign price action in recent weeks masks the scale of the supply disruptions from the Persian Gulf. However, in the absence of a deal, this is unlikely to last."

"We believe the market reaches an inflection point in late July if we do not see oil flows resuming before then. This is when inventory levels and seasonally stronger demand push prices significantly higher towards $120-130/bbl."

"OPEC remains fairly constructive on global oil demand, expecting it to grow just shy of 1m b/d YoY in 2026. This is down from a previous forecast of 1.17m b/d year-on-year, though. Most other agencies forecast a contraction in demand this year amid supply disruptions in the Middle East."

"Therefore, we would be cautious about assuming that the extension of the ceasefire is a done deal. Even if it is, it could be fragile. And clearly, if nuclear talks do not progress, it could very easily fall apart."

"This large decline was offset by signs of supply increases from other Persian Gulf producers, which ties in with recent reports that more oil is flowing through the Strait of Hormuz. Saudi output increased 157k b/d MoM, while the UAE and Iraq increased output by 87k b/d and 75k b/d MoM, respectively."

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