Global oil prices have eased ahead of renewed negotiations between Western powers and Iran over its nuclear program. Analysts warn this calm may be premature. Ole Hvalbye, an energy economist at Sweden’s SEB bank, cautioned that markets are underestimating risks tied to the Strait of Hormuz. The waterway handles nearly a fifth of the world’s seaborne oil shipments. Any disruption there could send prices sharply higher. Hvalbye told E24 that traders seem too relaxed about the geopolitical risks in the region.
The talks in Vienna aim to revive the 2015 nuclear deal, which Iran abandoned in 2019 after the U.S. withdrew. A return to the agreement would lift some sanctions on Iran’s oil exports. But even if a deal is reached, tensions over shipping lanes remain high. In recent months, several oil tankers have been targeted in the Gulf. The U.S. blamed Iran for attacks in 2019 and 2021, though Tehran denied involvement.
Saudi Arabia and the United Arab Emirates have increased naval patrols near Hormuz to deter threats. Their actions reflect concerns that Iran could disrupt shipping if negotiations fail. The U.S. Fifth Fleet is also active in the area, conducting joint drills with regional allies. These moves signal that the risk of conflict has not faded despite the diplomatic process.
Oil futures for Brent crude dipped below $80 per barrel this week. Yet the market remains fragile. Analysts at SEB estimate that a sustained closure of Hormuz could push prices past $120 per barrel within days. Such a spike would strain consumers globally, particularly in Europe and Asia, still recovering from last year’s energy crisis.
With Iran’s presidential election set for June, domestic politics could further complicate talks. Hardliners in Tehran have opposed concessions in the past. The combination of elections and regional instability creates a volatile mix for oil markets in the coming months.
Source: e24.no