Oil Markets Waver as Strait of Hormuz Reopening Timeline Stalls

Front-month West Texas Intermediate crude fell 0.4% to $80.40 a barrel, while Brent crude dropped 0.6% to $82.69. The price volatility follows a brief rally fueled by news of a pending U.S.-Iran peace deal in Switzerland. Despite the diplomatic breakthrough, analysts at OCBC Group Research warn that normalization will be a slow process. Mine clearance, insurance reinstatement, and the logistical hurdles of restarting production are expected to temper any immediate downward pressure on oil prices.

Broad equity markets in Asia largely tracked the decline in energy costs. The South Korean Kospi climbed 1.8%, and Japan’s Nikkei added 0.2%, as investors sought relief from regional inflationary pressures. Economists at DBS Group Research noted that while the peace deal is a significant milestone, confidence in the transit route will take months to recover. They anticipate that the normalization of Middle Eastern supply chains will be gradual, causing regional inflation to cool slowly rather than plummet in the near term.