Oil Prices Plummet as US and Iran Pause Strikes

Oil prices plummeted over 5% on July 27 as the US and Iran paused strikes, sparking hopes for diplomatic resolution and eased conflict. The pause followed two weeks of attacks disrupting oil shipments through the Strait of Hormuz.

Brent crude futures dropped $4.89 to $91.89, while US West Texas Intermediate crude fell $4.67 to $84.64 a barrel.

JPMorgan warned that every additional month of disruption could push Brent prices up by around $7 to $8 a barrel, potentially reaching $114 a barrel if the disruption continues for three months.

Goldman Sachs also cautioned that Brent crude could reach $120 a barrel if shipping through the Strait of Hormuz remains disrupted. However, its base case is that tensions in the Middle East will eventually ease, allowing prices to average $80 a barrel in the fourth quarter and $75 next year.