Oil Prices Fail to Reflect Worst-Case Iran Scenarios

Global benchmark Brent crude oil futures prices have dropped by nearly 5% to $92.06, largely due to renewed hopes of a lasting peace deal between the US and Iran.

The Strait of Hormuz remains contested, with shipping volumes through the narrow waterway collapsing after surging during a brief three-week ceasefire in mid-June.

Tehran has successfully activated its Houthi allies in Yemen to target Saudi tankers trying to transit the Bab el-Mandeb Strait, cutting off a key route for Saudi oil to reach refineries in Asia via the Red Sea port of Yanbu.

Exports from the Middle East remain constrained, with limited volumes through both the Hormuz and the Bab el-Mandeb straits.

The situation warrants a stronger response than has actually occurred in oil futures markets, according to some analysts.