Oil, gas prices fall on U.S.-Iran ceasefire, but Hormuz flows remain uncertain
(Bloomberg) — Oil and natural gas prices dropped sharply after the U.S. and Iran agreed to a two-week ceasefire aimed at halting the six-week conflict, though uncertainty persists over the timing of resumed flows through the Strait of Hormuz.
Brent crude fell about 13% to settle below $95/bbl, with West Texas Intermediate close behind. European natural gas futures also declined, at one point dropping as much as 20% in their largest intraday fall in more than two years.
The price reaction reflects expectations that supply disruptions could ease if shipments resume through Hormuz, which typically handles roughly one-fifth of global oil and liquefied natural gas flows. However, the waterway remains largely restricted, with shipping activity still limited as operators assess security risks and conditions for safe transit.
Prices partially rebounded after reports that tanker movements remain halted following continued regional hostilities, including Israeli operations in Lebanon and Iranian strikes across Gulf states. Disagreement persists over whether the ceasefire extends beyond direct U.S.-Iran engagement.
Even if the truce holds, market participants expect a gradual recovery in supply. “It is highly unlikely that trade into the Gulf will simply resume,” said Neil Roberts of the Lloyd’s Market Association, citing ongoing security risks and unresolved geopolitical tensions.
Recent data from the U.S. Energy Information Administration underscores the impact of the disruption. U.S. product inventories have been drawn down to offset lost Middle Eastern supply, with Gulf Coast distillate stocks at their lowest levels since September 2024 and gasoline inventories near multi-year lows.
Analysts caution that oil markets remain highly sensitive to developments in ceasefire negotiations. “Almost anything going wrong in these talks could very quickly put us back above $100,” said Jason Schenker, president of Prestige Economics.
Talks between U.S. and Iranian officials are expected to begin in the coming days, with Vice President JD Vance leading the American delegation. Discussions are expected to include potential sanctions relief, which could bring additional Iranian barrels to market over time.
Even with a ceasefire in place, restoring supply will take time. Production has been curtailed across multiple oil and gas fields, while some refineries have reduced runs or shut down entirely. U.S. government estimates indicate more than 9 MMbpd of regional output was offline in April, with a full recovery potentially extending into 2026.
In Qatar, efforts are underway to restart operations at the Ras Laffan LNG complex following earlier disruptions, though a meaningful recovery in exports will depend on the safe resumption of tanker traffic through Hormuz.
For now, physical traders and shipowners remain cautious. More than 800 vessels are still stranded in the region, and operators are waiting for clearer evidence that safe passage can be sustained before resuming normal shipping activity.
While the ceasefire has eased immediate market fears, the outlook for global energy supply remains tied to the durability of the agreement and the pace at which Hormuz transit can safely resume.
Map source: Global Energy Infrastructure
