Oil prices are easing, but don’t mistake that for calm.
That’s what Ole R. Hvalbye, Commodities Analyst at Skandinaviska Enskilda Banken AB (SEB), warned in a SEB report sent to Rigzone on Tuesday, adding that the Brent front month price is trading at $95 per barrel this morning, which he pointed out is roughly $10 per barrel below where we started April.
Hvalbye outlined in the report that the price is “looking orderly on paper” but warned that “we’ve seen daily swings of 5-10 percent in both directions, with the front-month printing as high as $104 per barrel and as low as $86 per barrel over the last two weeks”.
The analyst noted in the report that dated Brent, spot delivery to NW Europe, “is telling closer to the true physical story [at] $106 per barrel right now”. He highlighted that, while dated Brent is “still printing rich”, it’s “a long way off the $144 per barrel peak we hit on April 7”.
Hvalbye went on to outline in the SEB report that $95-100 Brent “is not a crisis”, pointing to historical examples.
“Nominal Brent peaked at … [around] $147 per barrel in July 2008; adjusted for U.S. CPI (ratio … [around] 1.47x), that’s around $215 per barrel in today’s money,” he said.
“The 2011-2014 era when Brent averaged $100-112 per barrel nominally translates to … [around] $140-155 per barrel in today’s prices,” he added.
“Where we sit this morning, high-90s front-month, mid-100s Dated, is nowhere near inflation-adjusted crisis territory for crude. The real squeeze is further down the barrel,” Hvalbye warned.
“Distillate and gasoline cracks have blown out as the SoH disruption hits Middle East product exports and Asian refining flows. It’s diesel and jet, not crude, doing the damage to end-user inflation right now, and that is where we’d focus the pain trade,” he continued.
Hvalbye highlighted in the report that the two-week Pakistani-mediated truce expires Wednesday and outlined that “no one is rushing to sign” a deal.
“Trump told reporters yesterday that a deal could come ‘quickly’ but that he feels ‘no pressure’ to strike one and that it is ‘highly unlikely’ he extends the ceasefire,” Hvalbye noted.
“VP Vance is reportedly travelling to Islamabad today alongside Witkoff and Kushner for a second round of talks, but Iran has publicly rejected the format, pointing to the continued U.S. naval blockade as a disqualifying violation,” he added.
“Overnight, Iranian FM Araghchi told his Russian counterpart that U.S. behavior is ‘incompatible with diplomacy’ and told his Pakistani counterpart that continued U.S. ceasefire violations remain the major obstacle to any diplomatic progress,” he said.
Hvalbye warned in the report that, “in theory, if disruption persists another month, cumulative lost supply runs to … [around] 1.0-1.1 billion barrels and Brent should be again pushed towards $110 per barrel”. The SEB analyst noted that every day the Strait of Hormuz stays shut, “the tail gets fatter and the paper-physical spread less sustainable”.
Hvalbye highlighted that the curve is pricing rest of year Brent at around $88 per barrel, which he noted is consistent with a clean view that the strait reopens by the start of May and that refiners don’t have to chase replacement barrels much further.
“That is a very optimistic path,” the analyst warned.
“Meanwhile the physical market is deteriorating by the hour: freight, insurance, voyage times, product cracks, inventory draws all moving the wrong way,” he said.
Hvalbye went on to question in the report if U.S. President Donald Trump has “written off the midterms”.
“Worth putting it on the table,” Hvalbye said in the report.
“His overall approval is running at 35 percent in the latest CNN poll (one point off his all-time low), RCP average sits near 41 percent, and Silver Bulletin’s net approval is -16.6. Net approval on the economy is -22, on inflation -34: both near second-term lows,” he added.
“Also, CNN’s data desk notes his inflation disapproval now exceeds Carter and Biden at comparable points. The uncomfortable question for the market is whether a president this deep in the polling hole still feels constrained by November, or whether he has quietly accepted the midterms are lost and is now singularly focused on coming out of the Iran conflict as the ‘winner’,” he continued.
“His ‘no pressure’ framing yesterday, combined with the hardening of the naval blockade rather than a softening, points the wrong way. If that is the real calculus, duration risk is meaningfully higher than what the curve is pricing today, and so is price risk,” Hvalbye warned.
“The market is betting on resolution; the politics are pointing the other direction,” he went on to state.
In a market update sent to Rigzone by the Rystad Energy team late Monday, Rystad highlighted that a new round of talks is being discussed, with the ceasefire nominally running until Wednesday.
“However, it is important to say that even taking as guidance our base case, where the current dynamic ends in a swift, clean resolution, supply will not come back right away,” Rystad warned.
“Our analysis shows that it would take until July for oil flows to normalize to some 80-90 percent of pre-war production levels, and another 1-2 months for those barrels start showing up at ports for processing into the most urgently needed products,” it added.
“It is in this context of extreme prompt tightness that the Dated-to-Frontline (DFL) Brent benchmark has reached levels of $25 per barrel,” Rystad continued.
The company noted that the DFL represents the premium that Brent physical barrels (Dated Brent) for immediate loading (typically 10-30 days ahead, current May) command over the Brent Futures front month (now pricing June).
“The explosion from a couple of dollars to an average $21 per barrel in the first week of April highlights the time value of ‘ASAP’ barrels over future-delivery barrels,” Rystad highlighted.
“Some in the market took last week’s retrace as a sign that the acute phase of the disruption is behind us. It is not,” the company warned.
Chief Oil Analyst Paola Rodriguez-Masiu projected in the update that “the extreme backwardation that we are seeing will likely continue rolling forward”.
“A market this short will not flatten gently, but instead will correct through higher prompt prices, and the longer the refinery margin squeeze runs, the sharper that correction will need to be,” Rodriguez-Masiu warned.
Rigzone has contacted the White House and the Iranian ministry of foreign affairs for comment on the SEB report and Rystad update. At the time of writing, neither have responded to Rigzone.
In a separate Rystad release sent to Rigzone yesterday, the company predicted that a sustained $100 per barrel oil price could unlock up to 2.1 million barrels per day of additional crude supply across South America by the mid-2030s.
“The finding comes as the effective closure of the Strait of Hormuz has forced a sharp upward revision in our forecasted average 2026 oil price, from $60 Brent per barrel in January to $89 per barrel today,” Rystad said in that release.
“At current production levels, government revenues across South America are expected to rise by approximately $43 billion this year alone relative to our base case, reinforcing hydrocarbons’ central role in public finance from Brasilia to Caracas,” it added.
In that release, Radhika Bansal, Senior Vice President of Oil and Gas Research at Rystad Energy, said, “the Middle East conflict has done more than spike oil prices – it has exposed how dangerously concentrated global supply chains are around the Strait of Hormuz”.
“South America is now positioned as the world’s most consequential source of incremental supply. The region offers scale, geologic quality and relative political stability at exactly the moment that the world is shopping for alternatives,” Bansal added.
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