US-Iran Peace Signals Emerge as Low Oil Price Era Ends
The Trump administration signaled on Thursday (28 May 2026) that a deal to end the Iran conflict may be imminent. While the news brings relief for global stability, analysts warn that oil prices are unlikely to drop to pre-conflict levels in the near term.
The market is no longer asking when oil prices will return to the pre-war range of around $60 per barrel. The bigger question is whether the energy landscape that allowed for low prices still exists.
“Returning oil to $60 per barrel is effectively off the table, even if this latest peace deal is reached,” said Ben McMillan, Chief Investment Officer at IDX Advisors. He added that supply recovery would take at least three to six months, plus a geopolitical risk premium that will remain embedded in oil prices for years.
Following reports of a potential deal, US and global oil benchmarks gave up most of their early gains on Thursday trading. According to FactSet data:
Analysts emphasise that the forces driving price increases over the past three months—such as tanker traffic disruptions in the Strait of Hormuz and damage to energy infrastructure in the Persian Gulf—are structural shifts that cannot be reversed by a ceasefire alone.
Parag Sanghani of Westwood Holdings Group explained that restoring global oil flows is not as simple as flipping a switch. VLCC tankers diverted during the conflict have been redeployed to routes worldwide. It takes two to three months just to reposition them back to the Gulf.
“The shipping industry needs to see consistent tanker crossings of the strait with US and Iran approval before truly believing the conflict is over,” Sanghani said.
Beyond logistics, physical damage to energy facilities is critical. Qatar estimates it will take three to five years to repair the Ras Laffan LNG plant, the most pessimistic indicator for regional infrastructure rebuilding.
This geopolitical risk premium is predicted to act like an embedded effective tax on oil prices long-term, driven by higher shipping costs, alternative route searches, and additional security expenses for tankers passing sensitive waters. (MarketWatch/I-2)