Brent Crude Falls Below Pre-Conflict Levels as Hormuz Shipping Recovers, While Deutsche Bank Warns Risks Remain

Brent crude oil extended last week's decline after shipping activity through the Strait of Hormuz continued to normalize, reducing concerns over immediate supply disruptions. Even so, Deutsche Bank Research noted that the recent rebound in oil prices suggests investors remain cautious about whether the current ceasefire will hold over the longer term.

Price Snapshot

Brent crude (current) US$71.99 per barrel

Trading below levels seen before the recent Middle East conflict.

Weekly performance -10.65%

Friday session -4.34%

Oil prices came under pressure last week as improving shipping conditions through the Strait of Hormuz reduced the geopolitical risk premium that had supported prices during the recent conflict. Commercial vessel movements gradually resumed after heightened tensions between US and Iran-linked forces had disrupted regional shipping and raised concerns about global energy supplies.

Earlier attacks involving commercial vessels and military facilities in Bahrain and Kuwait prompted the Joint Maritime Information Center to raise its threat assessment for the Strait of Hormuz. Although diplomatic efforts have since helped ease immediate tensions, market participants continue to monitor developments closely.

According to Deutsche Bank Research, the United States and Iran have agreed to suspend further military action ahead of technical discussions scheduled in Doha this week. The temporary reduction in hostilities has allowed shipping activity to continue, but several key issues—including future transit arrangements and operational provisions related to the Strait of Hormuz—remain unresolved.

Lower oil prices have also influenced broader market expectations. A decline in energy prices may reduce inflation pressures, potentially affecting expectations for future central bank policy. If energy costs remain contained, investors may see less need to anticipate additional monetary tightening, which could provide some support for interest rate-sensitive sectors such as technology and other growth-oriented industries.

Deutsche Bank also cautioned that the current ceasefire should be viewed as temporary until outstanding issues are resolved. While immediate geopolitical tensions have eased, uncertainty surrounding regional stability continues to warrant close market attention.

What to Watch

Hormuz shipping activity (Daily)

Investors will continue monitoring commercial shipping through the Strait of Hormuz. Any renewed disruption could increase concerns about global oil supplies and contribute to higher price volatility.

Doha technical discussions (This week)

Market participants will watch whether negotiations produce progress on unresolved issues, including shipping arrangements through the Strait of Hormuz. A constructive outcome could improve market confidence, while limited progress may revive geopolitical concerns.

Inflation expectations and central bank outlook (Ongoing)

With Brent crude trading below pre-conflict levels, investors will continue assessing whether lower energy prices influence inflation expectations and the outlook for future interest-rate decisions.

Source: Deutsche Bank Research, Joint Maritime Information Center, CME FedWatch.