Intermoney | For the US administration, retail energy prices will be a cause for concern. The national average price of diesel has already exceeded $5 per gallon, the highest level since 2022.
If Washington’s diplomatic initiative bears fruit (it has presented a fifteen-point peace plan to Tehran via mediators), crude oil futures could experience a sharp fall, although such a decline may not be permanent given the underlying supply strain that has built up in the global market due to the prolonged closure of traffic through the Strait of Hormuz.
Tensions in the oil market will persist for months, even in the most optimistic and low-probability scenarios. A cessation of hostilities would not trigger an immediate flood of tankers through the strait, as shipowners, operators and crews would likely want a period of calm before resuming operations. Mine clearance or naval escorts would likely take weeks to implement. The same lengthy timeframe applies to the resumption of production at the numerous fields that have been shut down around the Persian Gulf. See the statement from Kuwait, which warned that restoring supply is a process expected to take months, even after a ceasefire. Given the difficult outlook for global supplies of oil and petroleum products, the International Energy Agency may be prompted to consider an additional and coordinated release of crude oil to try to offset the shortage of barrels caused by the closure of the Strait of Hormuz. At present, Brent remains above $100 per barrel.
