Oil prices plunge after Iran ceasefire deal - how low could they go
Photo: Oil prices may start rising again (Getty Images)
Uncertainty risks on global markets remain. Despite the recent drop in oil prices, a rebound is possible, states Oleksandr Martynenko, Head of the Corporate Analysis Department at ICU Group, in a comment to RBC-Ukraine.
The price of Brent crude plummeted from $78.5 to $69.4 per barrel after US President Donald Trump announced a ceasefire between Iran and Israel.
"Soon, volatility on global financial markets may increase, and prices for oil and natural gas could rise even further," Martynenko said.
Risks for global markets
The main risk to rising oil prices is the potential closure of the Strait of Hormuz. Iran has not yet backed away from its plans to block this key regional route for oil and LNG transportation.
"The most serious consequence of the conflict, according to investors, would be Iran blocking the Strait of Hormuz, through which 20–25% of the world's seaborne crude oil supply and up to 30% of liquefied natural gas passes," Martynenko said.
However, there is hope the Strait won't be closed, as such a move would harm Iran itself.
"About 80–90% of the country's oil exports go through the Strait of Hormuz, and alternative routes are extremely limited. That's why investors believe the probability of the strait being blocked remains relatively low," Martynenko added.
