Oil prices plunged today on fresh de-escalation hopes, Naeem Aslam, CIO Zaye Capital Markets, said in a statement sent to Rigzone on Wednesday.
In the statement, Aslam highlighted that West Texas Intermediate (WTI) crude oil had dropped 3.9 percent to $97.45 per barrel that Brent crude oil had slid 3.8 percent to $100.06 per barrel, “as reports emerged of UAE-backed efforts to reopen the Strait of Hormuz by force and Trump signaled a swift U.S. exit from Iran within weeks”.
“Markets are betting on a quick diplomatic breakthrough, but analysts warn this selloff is premature – lingering infrastructure damage, delayed shipping normalization, and a sticky geopolitical risk premium mean prices are unlikely to collapse even if the conflict ends soon,” Aslam warned in the statement.
“In short, today’s dip looks like a classic ‘sell the rumor’ move that could reverse once reality sets in,” he added.
In a Skandinaviska Enskilda Banken AB (SEB) report sent to Rigzone on Wednesday, SEB chief commodities analyst Bjarne Schieldrop and SEB commodities analyst Ole R. Hvalbye noted that, on Tuesday evening, the U.S. “announced that it plans to leave Iran in two to three weeks even if the Strait of Hormuz is still closed”.
“China and Pakistan presented a new initiative to end the war. Iran stated that it was open to end the war if certain requirements were met – like guarantees of not being attacked again which it previously also has demanded,” the analysts added.
In this report, the analysts highlighted that the Brent crude oil June contract was down $1.5 to $105.5 per barrel. The analysts also made Brent price predictions in the report, which they emphasized were projected prior to the price drop.
“We expect Brent to average $100 per barrel for the balance of the year and $85 per barrel and $80 per barrel in 2027 and 2028, respectively, as depleted stocks are rebuilt,” Schieldrop and Hvalbye said in the report.
“We assume that the Strait of Hormuz operates at only 20 percent from now to mid-May before it then is fully reopened, that no further major oil and gas infrastructure is damaged in the Persian Gulf, and also that Saudi Arabia exports 5.5 million barrels per day from Yanbu versus the normal 1.5 million barrels per day while the Strait is disrupted,” they added.
The analysts warned in the report that their outlook “is naturally highly sensitive to how long the Strait of Hormuz is disrupted and how much it is disrupted”, noting that “just a couple of weeks makes a significant difference in outlook”.
They went on to warn that “there is considerable risk to the upside if Iran restrain the flow through the Strait beyond mid-May”.
Rigzone has contacted the White House and the Iranian Ministry of Foreign Affairs for comment on Aslam’s statement and the SEB report. Rigzone has also contacted the UAE Ministry of Foreign Affairs for comment on Aslam’s statement. At the time of writing, none of the above have responded to Rigzone.
In a video posted on the Associated Press YouTube page on Wednesday, which showed U.S. President Donald Trump speaking to reporters, Trump outlined that he thought the U.S. would be done with the conflict in “two or three weeks”.
“We’re finishing the job and I think within, maybe two weeks, maybe a couple of days longer to do the job,” Trump said in that video.
A statement posted on Pakistan’s Ministry of Foreign Affairs X page on Wednesday highlighted Pakistan Deputy Prime Minister/Foreign Minister Senator Mohammad Ishaq Dar’s Meeting with Chinese Foreign Minister Wang Yi in Beijing on March 31.
“[The] Deputy Prime Minister/Foreign Minister briefed Foreign Minister Wang Yi in detail on the efforts Pakistan continues to make towards cessation of conflict and resumption of dialogue,” the statement noted.
“Both sides reviewed the regional security environment and expressed deep concern over its serious socio-economic repercussions on developing countries,” it added.
“In this context, both sides launched a five point initiative for restoring peace and stability in the Gulf and Middle East,” it continued.
A statement posted on the X page of the Spokesperson of Ministry of Foreign Affairs of China on Wednesday highlighted the “five-point initiative of China and Pakistan for restoring peace and stability in the Gulf and Middle East Region”.
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