Peace momentum is building and causing an energy sell-off.
That’s according to Ole R. Hvalbye, Commodities Analyst at Skandinaviska Enskilda Banken AB (SEB), who outlined the point in a report sent to Rigzone on Wednesday. Hvalbye warned, however, to not believe the hype “until tankers are smooth sailing through [the] Strait of Hormuz”.
In the report, Hvalbye highlighted that front month Brent crude settled at $94.79 per barrel on Tuesday, which he noted was down more than four percent from noon yesterday, “after having traded as high as $103.87 per barrel the day before”.
“Overnight the June Brent contract climbed roughly $1 per barrel, trading around $95 per barrel this morning,” he added.
“The broad-based pullback is driven by growing market optimism that diplomacy (not escalation) is now dominating,” he continued.
Hvalbye stated in the report that two parallel diplomatic developments are fueling the current sell-down.
“First, Trump told the NY Post that the next U.S.-Iran talks ‘could be happening over next two days’ in Islamabad. The ceasefire is set to expire on April 21st (pushing for urgency),” he noted.
“Second, in a historic first, Israel and Lebanon met for their first high-level talks in more than 30 years. The participants held ‘productive discussions’ on steps toward launching direct negotiations between Israel and Lebanon,” he added.
“The market reads the twin diplomatic developments … as a material de-escalation signal, which is naturally pulling the financial crude contracts lower,” Hvalbye said.
The SEB analyst warned, however, that the physical market tells a different story.
“The gap between the forward-looking Brent June contract and here and now physical prices remain large”.
“Dated Brent was assessed at $132 per barrel on Monday but naturally slipped to … [around] $125 per barrel yesterday (in the wake of financial contract sell-off). Also, jet fuel in Europe and Singapore continues to trade close to $200 per barrel,” he pointed out.
“Even though there is still a large gap between Dated Brent and the front-month contract at … [around] $95 per barrel, the front-month is effectively pricing that the Strait of Hormuz problem gets solved well before summer (June),” he said.
In the report, Hvalbye noted that the Strait of Hormuz is theoretically closed from both sides, with some ships sailing through. He added that the only meaningful Middle East oil reaching the global market is Saudi Arabia’s pipeline exports through Yanbu to the Red Sea.
Hvalbye also pointed out that French President Emmanuel Macron “has called for the Strait of Hormuz to be reopened unconditionally and announced that France and the UK will host a conference in Paris this Friday, bringing together non-belligerent countries ready to contribute to a joint goal at restoring freedom of navigation in the Persian Gulf”.
The SEB analyst outlined that this adds “another diplomatic angle to the peace momentum forming around the conflict”.
Concluding the report, Hvalbye warned that the situation is fast-moving but revealed that SEB is maintaining its base case from early April, for now.
“As we outlined in our oil and gas price update on 1st April, we expect Brent to average $95 per barrel for 2026 and $85 per barrel and $80 per barrel in 2027 and 2028 respectively”, he said.
“Our base case assumes the Strait of Hormuz operates at only 20 percent of normal until mid-May before full reopening, and that no further major oil or gas infrastructure in the Persian Gulf is damaged,” he added.
“The diplomatic momentum over the past 48 hours, with U.S.-Iran talks potentially resuming this week and the historic Israel-Lebanon engagement, supports the case that political will for resolution is strengthening,” he continued.
Hvalbye emphasized in the report, however, that the Strait of Hormuz is not Trump’s alone to reopen.
“Iran has its own calculus, and the regime may find it strategically useful to keep flows restricted even after any peace deal, whether to extract reparations, guarantee security, or simply to inflict political pain ahead of the November U.S. midterm elections,” Hvalbye said.
“The risk to our outlook is firmly two-sided: faster diplomacy could bring prices down materially from here, while a breakdown in talks or, worse, infrastructure damage could send financial Brent contracts violently higher, while also pushing Dated Brent decisively above $150 per barrel,” he added.
Hvalbye went on to warn that the situation is changing by the day.
In a report sent to Rigzone by the Standard Chartered team late Tuesday, Standard Chartered Bank Energy Research Head Emily Ashford highlighted that, “despite the failure of the U.S.-Iran talks to reach an agreement, energy prices have not re-escalated to pre-ceasefire levels”.
“The Islamabad meeting was a likely first step and the market appears hopeful that further talks will bring the sides closer together, while the tentative ceasefire seems to be largely holding,” Ashford added.
“The U.S.-imposed counter blockade appears shaky, with reports of at least one vessel transiting after it was imposed, although it may have later turned back,” Ashford continued.
In the report, Ashford noted that crude opened “sharply higher” on April 13 but added that “even a $10 per barrel rise only gave back half the price lost earlier in the week”.
“Brent crude for June delivery settled at $102.59 per barrel on 13 April; a week on week fall of $10.41 per barrel, -9.48 percent,” Ashford pointed out.
“Perhaps a total blockade of any vessel transits through the strait is being viewed by the market as impossible, or as a strong negotiating position by both sides, to be softened over time,” Ashford said.
“Escalating energy prices and supply tightness, which are an inevitable consequence of the blockades, work against the goal of reducing U.S. consumer pain at the petrol pump,” the analyst highlighted.
Ashford pointed out in the report that front-month Brent was trading under $100 per barrel and outlined that the market appeared “optimistic about a second round of talks, or de-escalation in the blockades in the near term”.
“Our combined crude oil money-manager positioning index for the four main contracts is 22.8, a 0.2 increase week on week, although the split between Brent and WTI is stark,” Ashford said.
“The index for NYMEX WTI is -39.3, while ICE Brent is 85.7. Call skew is back towards the highs seen during the most intense bombardment phases of the conflict,” Ashford added.
“Implied volatility remains extremely elevated, and 30-day annualized Brent volatility increased by 9.78 percentage points week on week to 104.79 percent,” the analyst continued.
Ashford went on to warn in the report that there are three key risks to highlight from this week’s developments.
“One, Iran may respond by calling on the Houthis to attack vessels transiting the Bab al-Mandeb Strait, the southern exit route from the Red Sea and one of the two exits that Saudi Arabian crude exports can currently take,” Ashford said.
“The Houthis have a ceasefire agreement with the U.S., signed in May 2025, and to date have only targeted Israeli assets, so this would represent an acute escalation,” Ashford added.
“Two, the deployment of many more military vessels in the Strait of Hormuz increases the operational risk of an incident that could open the doors to further escalations or broader maritime tensions even outside of the Gulf,” Ashford continued.
“Three, whether or not vessels can transit, there is potentially an increased risk of delays, inspections, interdictions, and an associated rise in freight and insurance costs,” the analyst went on to warn.
Rigzone has contacted the White House and the Iranian foreign ministry for comment on the SEB and Standard Chartered reports. Rigzone has also contacted the Israeli and Lebanon foreign ministries for comment on the SEB report. At the time of writing, none of the above have responded to Rigzone.
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