US-Iran Peace Deal May Not Immediately Restore Oil Flows - Rystad Energy

KUALA LUMPUR, May 6 (Bernama) -- A potential peace deal between the United States (US) and Iran could trigger an immediate reaction in oil futures markets, but any meaningful recovery in physical oil supply flows is expected to take several weeks, said Rystad Energy.

The energy research company said reports of a possible US-Iran agreement are gaining credibility, with Pakistan’s foreign ministry expecting a resolution “very soon” while Washington is anticipating a response from Iran within 48 hours.

Rystad Energy chief oil analyst Paola Rodriguez-Masiu said even speculation surrounding a possible agreement has already pushed oil prices lower.

"A deal announcement would move futures further immediately. In fact, even the potential of a deal is already triggering a decline in oil prices," she said in a market update.

However, she said that the physical oil market operates on a slower timeline.

Rodriguez-Masiu said that even under an optimistic scenario involving a 30-day phased reopening of the Strait of Hormuz, substantial recovery in oil volumes would only materialise in June at the earliest.

She said that arrivals at processing ports could lag by an additional four to six weeks after that.

“Transit insurance markets need to reprice, vessel operators need verified and sustained access, and commercial confidence cannot be rebuilt overnight.

“The six-to-eight-week lag between credible access conditions and real flow normalisation is not a conservative estimate, it is a structural feature of how shipping markets work,” she said.

The route through Straits of Hormuz is a strategic narrow waterway through which 20 per cent of the world's crude oil and gas passed.

-- BERNAMA