Energy and commodity markets are edging lower amid growing optimism that the United States and Iran are moving toward a potential agreement to extend a ceasefire and reopen the Strait of Hormuz, according to ING THINK analysts Warren Patterson and Ewa Manthey.
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Reports indicate that both sides have reached a memorandum of understanding (MoU) that would extend the ceasefire by 60 days and restore access through the strategic waterway. However, the agreement still requires approval from President Trump, with limited confirmation from the Iranian side regarding its scope.
“The oil market continues to edge lower amid growing optimism that the US and Iran are moving toward a deal,” the ING analysts note, highlighting expectations of a gradual supply recovery should the agreement proceed.
A reopening of the Strait of Hormuz would offer immediate relief to global oil flows, allowing tankers to resume transit from the Persian Gulf. However, ING cautions that recovery would likely be gradual rather than immediate, as shipowners may initially remain hesitant due to concerns over potential renewed conflict. In addition, upstream production in the region has already fallen significantly, with Persian Gulf crude output (excluding Qatar) reportedly down 10 million barrels per day compared to pre-war levels.
“The recovery in upstream production will be gradual rather than immediate,” the report states, adding that refinery infrastructure damage and storage constraints would further slow the normalisation of supply chains.
The analysts also note that markets have already priced in elements of a potential resolution, limiting further downside in oil prices in the short term. However, tight inventories and constrained supply recovery mean volatility is expected to persist.
Recent US Energy Information Administration (EIA) data showed commercial crude inventories fell by 3.3 million barrels over the week, while total crude stocks declined by 12.39 million barrels when Strategic Petroleum Reserve adjustments are included. Gasoline and distillate inventories also recorded declines despite higher refinery utilisation.
In Europe, refined product inventories in the ARA hub decreased modestly, with jet fuel stocks remaining significantly below five-year averages, underscoring ongoing tightness in aviation fuel markets.
In natural gas, Henry Hub futures surged more than 8% in a single session, driven by lower-than-expected storage builds and expectations of rising LNG feedgas demand following maintenance completion at several facilities.
Meanwhile, gold prices recovered earlier losses as geopolitical developments eased risk sentiment. However, ING warns that inflationary pressures linked to energy prices could keep interest rates elevated, weighing on non-yielding assets such as gold.
“We expect gold to remain rangebound in the near term,” the analysts state, citing a balance between improving risk appetite and persistent…
Read More: Energy markets on edge as US–Iran ceasefire talks rattle commodity dynamics
