Crude oil prices will remain quite high in the coming months, with Brent staying above $100 per barrel, as the U.S. and Iran remain distant on a potential agreement, Cedric Chehab, chief economist at BMI, told CNBC on Monday.
A deal “could take several months yet,” Chehab told CNBC’s program Squawk Box Asia today, as Brent Crude prices traded at about $104 a barrel in Asian trade.
BMI forecasts that a potential U.S.-Iran deal would happen by the end of the first quarter of 2027 “because it will take some more time for that economic pressure to build on both sides,” the economist noted.
“And because of that, we think that oil prices will remain quite elevated, above $100 per barrel of crude, and that’s going to continue putting pressure on global inflation, inflation expectations, and monetary policy,” Chehab told CNBC.
The high oil prices create a real challenge for policymakers, according to the economist.
Chehab also noted that “the economic noose on the U.S. economy has started to tighten” and the Trump Administration is trying to lower domestic fuel prices ahead of the midterm elections on November 3.
U.S. President Donald Trump late on Sunday announced “an energy ceasefire” between Russia and Ukraine, although Moscow has not officially acknowledged such is in force.
While President Trump claimed the agreement was to go into effect immediately, Ukrainian President Volodymyr Zelenskyy said Ukraine would agree to the ceasefire if Russia agreed to it, too.
“Ukraine wants peace. The question is whether Russia does. The Armed Forces of Ukraine have received all the appropriate orders. We are awaiting clear details of the dialogue between America and Russia – and we expect Putin to follow through on what President Trump said,” Zelenskyy said late on Sunday.
In a subsequent Axios report, a White House official was reported as describing the proposal as “refinery for refinery,” meaning both sides would stop attacking each other’s oil refineries rather than energy infrastructure.
By Tsvetana Paraskova for Oilprice.com
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