Oil prices could continue to trend lower following the interim agreement between the United States and Iran, according to Goldman Sachs oil trading executive Jerome Dortmans. While markets have already priced in much of the impact from the ceasefire extension and the gradual reopening of the Strait of Hormuz, analysts believe crude prices may slowly decline as geopolitical tensions ease.
Brent crude, which surged to around $118 per barrel during the height of the US-Iran conflict, has fallen to approximately $76 per barrel. Although prices remain above the levels seen at the beginning of the year, the sharp decline reflects growing optimism that disruptions to global oil supplies may ease in the coming months.
Dortmans noted that while the agreement is only temporary and a comprehensive peace settlement has yet to be reached, the oil market appears to be moving toward a more stable environment. He expects prices to “grind lower” over time, although short-term volatility driven by geopolitical headlines is still possible.
The reopening of the Strait of Hormuz is expected to restore oil flows that were severely disrupted during the conflict. Additional supply from Iran and increased exports from producers such as Brazil, Kazakhstan, and Venezuela could further support lower prices. Meanwhile, some investors are betting that oil could fall to between $50 and $60 per barrel if a lasting peace agreement is reached and global crude surpluses expand.
However, Goldman Sachs cautions against expecting a dramatic collapse in prices. Global oil inventories have been significantly depleted during the conflict and will need to be replenished. Strong seasonal demand for gasoline and diesel, especially in the Northern Hemisphere, could also provide support to the market.
The outlook will depend heavily on future developments between Washington and Tehran. A comprehensive peace agreement could create a more balanced oil market, while renewed tensions may quickly reverse recent gains. For now, traders appear increasingly confident that the market is returning to a more normalized state, though risks remain.
