Brent unlikely to fall below $70 after reopening of Strait of Hormuz — expert

MOSCOW, June 16. /TASS/. Brent crude prices are unlikely to fall below $70 per barrel after the reopening of the Strait of Hormuz, while a reasonable price range through the end of the year could be $70-75 per barrel, Research Director at Implementa Maria Belova told TASS.

"The finalization of the deal scheduled for June 19 increases the likelihood of further declines in Brent prices. If Middle Eastern oil supplies return quickly, a reasonable target range through the end of the year would be $70-75 per barrel. A deeper decline is unlikely without additional excess supply or a significant cooling in demand," Belova said.

According to her, the first scenario is unlikely because almost no producers have the capacity to rapidly increase output, while the second is constrained by the need to replenish strategic reserves both in member countries of the International Energy Agency (IEA) and in China, which could generate additional demand of around 1 mln barrels per day.

Belova also noted that physical supplies of oil and liquefied natural gas (LNG) could begin recovering within several weeks, although full restoration would take between six months and one and a half years.

"As for the damaged LNG plant in Qatar, which accounts for 17% of the country's production capacity, or about 13 mln tons, its restoration will take between three and five years, according to official statements by representatives of QatarEnergy," she added.

According to the expert, a transitional period may emerge in which exchange-traded prices decline while the physical market faces localized shortages of raw materials.

"Futures prices often reflect expectations about future balances and trader sentiment, while local physical flows depend on actual logistics and contractual arrangements. This divergence may persist until physical flows and infrastructure become synchronized with market expectations," Belova explained.

She also suggested that market participants may currently be displaying excessive optimism. "There is a sense that market players are underestimating the time required for the actual restoration of export flows or are failing to account for potential technical and contractual constraints," the expert concluded.

Earlier, Russian Deputy Prime Minister Alexander Novak stated that an oil price of around $80 per barrel, with a possible deviation of approximately $5 in either direction, represents a balanced level acceptable to both consumers and producers.

The peace agreement

As previously reported by Pakistani Prime Minister Shehbaz Sharif on X, an agreement between the United States and Iran has been reached, and the signing ceremony is scheduled to take place in Switzerland on June 19.

US President Donald Trump also stated on Truth Social that the United States and Iran had concluded a deal. In addition, he said he had ordered the lifting of the naval blockade of Iran and was "authorizing" the resumption of shipping through the Strait of Hormuz. The Strait of Hormuz will be opened "for demining" following the signing of the agreement with Iran on June 19, Trump said.