UAE Media: Oil Prices May Take Weeks to Stabilise

Dubai (ANTARA) - Oil prices may need four to eight weeks to stabilise, even if the Strait of Hormuz is reopened this week. A backlog of tankers, elevated insurance costs, low inventory levels, and ongoing geopolitical risks will keep a risk premium embedded in energy markets, Gulf News reported on Wednesday, citing analysts. The UAE-based newspaper noted that Brent crude prices have fallen from wartime highs near 120 US dollars per barrel to around 80 dollars, as market participants price in expectations of a US-Iran deal and the reopening of the key shipping route. However, analysts believe that while futures markets have reacted swiftly, the physical oil market will take much longer to return to normal. The Strait of Hormuz handles roughly 20 percent of global oil and liquefied natural gas trade, according to the report. Analysts said the market will need proof that tankers can transit safely and consistently before the remaining geopolitical risk premium is removed from oil prices. The report highlighted that the crisis has exposed the world’s continued dependence on energy flows through the Strait of Hormuz and may accelerate efforts by Gulf states to develop alternative pipelines and export routes to strengthen energy security and reduce vulnerability to future disruptions. The United States, Pakistan, and Iran announced in the early hours of Monday local time the finalisation of a peace memorandum of understanding to end the war, following weeks of negotiations. Under the plan, the MoU is to be formally signed in Switzerland on Friday. US President Donald Trump said on Tuesday that the US would ensure the Strait of Hormuz is fully open by Friday.