Oil Markets after US-Iran MOU. Relief amid Uncertainty

Oil markets steadied after the US-Iran MOU eased immediate fears over the Strait of Hormuz, but uncertainty remains high. Brent crude stayed range-bound as traders weighed tanker movements, Iran’s future potential maritime fee plans, regional tensions involving Israel, and rising shipping and insurance costs. 

This episode breaks down why prices still have a firm floor, how OPEC’s 2026 outlook changes the bigger picture, and why India, China, and Gulf producers are moving to boost energy security and find alternative supply routes. 

👉 Please like, subscribe, and share your thoughts in the comments.

Transcript

Brent crude was slightly jolted after plans for Vice President JD Vance to begin talks with Iranian representatives were suspended. Reports gave no reason for the delay, though overnight Israeli strikes in southern Lebanon may have been a factor. Prices inched further down as reports later said Israel and Lebanon had agreed to a ceasefire starting today, Friday.

This was as more oil tankers were said to be moving through the strait of Hormuz. The MOU earlier signed by Donald Trump – President of the United States and Masoud Pezeshkian – President of Iran, has allowed both sides to claim victory … as negotiations progress towards a more permanent pact. While, there are obstacles before a lasting agreement – markets are relieved that some sort of truce has been achieved as the 60 day deal starts on shaky ground at best.

Though Iran has confirmed that the Strait of Hormuz is open and the US said it has ended its own naval blockade, the contention is by no means over.  Reports that Iran still wants to introduce a maritime fee for ships after the negotiating period has not helped getting the accord to a strong start. Trump is opposed to any toll for ships using the Hormuz waterway.

Analysts say the uncertainty baked into the MOU and challenges with israel - set a firm floor on dropping prices. Market analysts however updated their forecasts for 2026, seeing lower prices for Brent standard - range bound between $75 and $85 a barrel in the near term.  The wide range and volatility reflects a refocusing on timing and volume of resumption in oil shipping and if insurance rates and other logistics related costs will remain elevated. This means caution in coming to any conclusion on the pace of normalisation.

Meanwhile, middle eastern players including UAE , are accelerating alternative pipeline construction to bypass, as much as possible,  the strait of Hormuz – which reduces the power of Iran in controlling oil flows from the region.   We also see major importers like India building additional inventory storage to improve their energy security.  The India state-owned Oil and Natural Gas Corp is building $1.6B storage infrastructure to expand strategic petroleum reserves to boost energy security.  India’s underground Strategic Petroleum Reserve storage currently has total capacity of 5.33 million metric tons of crude oil, equal to 39 million barrels of crude oil, or just 8 days’ worth of consumption. Additional infrastructure at Mangaluru will take capacity up to over 7m metric tonnes raising storage capacity by a third.  Other major importers like China are doing the same .

Amid the drama, OPEC released its latest World Oil Outlook 2026 report this week. The outlook is built on the view that billions of people outside the OECD will continue to seek cars, air conditioning, air travel, consumer goods and reliable electricity. Solid growth in Africa and other emerging and developing economies is also expected to support strong energy demand. India alone is projected to add over 8m bpd of oil demand by 2050, while Africa, the Middle East, Latin America and developing Asia are expected to account for much of the remaining growth. OPEC forecasts global oil demand to rise from 105.1 million barrels per day in 2025 to 113.3 million by 2030, and to exceed 124 million by 2050. In a recent interview, OPEC Secretary General Haitham Al Ghais said the report challenges the thinking that oil demand will peak in the foreseeable future. He also rejected earlier forecasts from the International Energy Agency that point to a near-term supply glut. Meanwhile, EV sales continue to dominate headlines, governments remain committed to net-zero targets, and energy transition advocates take a different view. OPEC argues that fossil fuels will retain their share of the energy mix, while coal-based energy will fall sharply and renewables will grow the fastest. Oil demand is expected to peak only in richer countries, as EV adoption accelerates in Europe, California and China. 

Hello and welcome to Global Business Insights, where we bring perspectives to help you understand an increasingly complex terrain. 

In other news, the US-Iran memorandum of understanding has eased immediate risks, bringing some relief to markets. Against that backdrop, the Bank of England left interest rates unchanged yesterday, describing the decision as an “active hold.” The BOE kept rates at 3.75% and lowered its inflation forecast, while warning that uncertainty linked to the Middle East conflict remains. The decision is being read as a tightening signal, since markets had expected rate cuts before the conflict in Iran. Meanwhile, the European Central Bank raised interest rates at its own latest meeting. The first G7 apex bank to do so.

Governor Andrew Bailey said higherenergy bills will continue to pressure households, with the Ofgem price cap rising from July. However, the BOE now expects inflation to peak slightly above 3.25% toward end of the year, below previous best-case forecast of 3.6%.

In the UK, the pound sterling remains pressured by politics and tepid growth outlook. GBP/USD risks are skewed to the downside, reflecting the stronger US growth outlook relative to the UK and the murky UK political backdrop. On the politics, Andy Burnham won the Makerfield by-election, clearing a path for his return to parliament and a leadership challenge to Prime Minister Keir Starmer. 

And in Africa, Kenya and the United States are reported to be close to agreeing a critical minerals deal that would require strategic resources to be processed locally, as African governments push to capture more value from their natural wealth. As global demand for critical minerals rises, governments across the continent are increasingly tying resource access to local processing, manufacturing and job creation rather than exporting raw materials.  But President Ruto at the G7 is also expected to have advanced the many other causes of the continent.  At the Africa Forward Summit in Nairobi, African leaders called for a reassessment of how risk is priced, how private capital can be mobilised and how African countries can gain access to cheaper, longer-term development finance. The obvious challenge for Ruto is that the G7 remains a club of the world’s most advanced economies  but though they listen, they often move more slowly when it comes to issues confronting developing nations.

Global markets were mixed today Friday, with Asia-Pacific exchanges mostly closing lower as investors weighed the implications of a U.S.-brokered peace agreement with Iran. U.S. markets were closed for the holiday. Also, attention may now begin to shift away from months of AI-driven headlines and toward the strength of U.S. economic growth, the path of inflation, and questions around Federal Reserve independence under Kevin Warsh as he announced taskforces to begin a process of overhaul in Federal Reserve operations.

Well that’s it on this special weekend episode of global business insights. We are now on Spotify, Apple, YouTube podcasts and most popular platforms where you get your podcasts from. Remember to select the notification button if you subscribe on YouTube. We do use Artificial Intelligence for generating hashtags, key words and for editorial purposes, but we crosscheck all facts with primary sources as well.  Thanks for watching. Bye Bye.