Global oil prices are projected to remain in the "low $100s" for the majority of the current year, even under the assumption that the critical Strait of Hormuz waterway could reopen as early as next month. This forecast comes from investment bank JP Morgan, which noted in a recent analysis that oil supplies from the region are unlikely to return to normal operational levels swiftly.
The bank's assessment follows a notable surge in oil prices, which escalated after US President Donald Trump characterized Iran's response to proposals aimed at ending the ongoing conflict as "totally unacceptable." Iran, through its mediator Pakistan, had conveyed its terms, reportedly calling for an immediate cessation of hostilities and assurances against further US-Israeli military actions targeting Iran, according to Iran's semi-official Tasnim news agency.
In the immediate aftermath of these developments, the international oil benchmark, Brent crude, experienced a significant rise, climbing over 4% to reach $105.94 per barrel at one point before settling back to approximately $105. The Strait of Hormuz, a vital chokepoint for global energy shipments, has been effectively closed since shortly after the conflict's commencement on February 28, causing substantial disruptions to the flow of oil and gas worldwide.
President Trump publicly reacted to Iran's submitted terms via social media, stating, "I have just read the response from Iran's so-called 'Representatives.' I don't like it – TOTALLY UNACCEPTABLE." Reports from US news outlet Axios indicated that Washington's conditions for a resolution included the restoration of unimpeded transit through the Strait of Hormuz and the cessation of Iran's nuclear enrichment activities.
Adding to the complex geopolitical landscape, Israeli Prime Minister Benjamin Netanyahu asserted that the conflict would not conclude until Iran's enriched uranium stockpiles are "taken out." A ceasefire, initially announced in early April to facilitate peace negotiations, has largely held, despite sporadic exchanges of fire. President Trump had previously extended this truce indefinitely on April 21, providing Iran an opportunity to formulate a "unified proposal."
Energy markets have experienced considerable volatility since the conflict began. Brent crude prices have notably surpassed the $100 per barrel mark once more, a threshold crossed following the implementation of the ceasefire on April 8.
JP Morgan's analysis, detailed in a note released on Monday, suggests that oil prices are expected to persist in the low $100s for most of the remaining year. The bank anticipates an average price of $97 per barrel for the entirety of 2026. A key takeaway from their research is that the reopening of the Strait of Hormuz will not immediately lead to a rapid normalization of supply conditions. Instead, the analysis points to potential bottlenecks shifting to factors such as tanker availability, the pace of refinery restarts, and broader logistical challenges.
The Strait of Hormuz, a crucial artery through which approximately one-fifth of the world's oil and gas shipments typically transit, has been effectively rendered impassable. This situation arose after Tehran issued threats to target vessels attempting to cross it, in retaliation for US-Israeli strikes.
Major energy corporations have reported substantial profit increases, directly correlating with the surge in global oil and gas prices. Saudi Aramco, the Saudi Arabian energy giant, announced on Sunday that its earnings for the first quarter of the year had surged by more than 25% when compared to the same period in 2025. Aramco CEO Amin Nasser highlighted the company's cross-country pipeline as a "critical supply artery" that enabled it to circumvent shipping disruptions caused by the conflict.
Similarly, BP disclosed last month that its profits for the initial three months of the year had more than doubled, while Shell announced the previous week a significant jump in its earnings. Nasser further cautioned investors on Monday that the energy shock stemming from the war could potentially extend into 2027, even if the Strait of Hormuz were to reopen soon. He elaborated that a market rebalancing could take months following the Strait's reopening, and any further delays would push normalization into 2027.
Nasser also noted that the market has absorbed an "unprecedented supply loss of about a billion barrels of oil." Data from a Reuters survey indicated that crude output from the Organization of the Petroleum Exporting Countries (Opec) in April decreased by 830,000 barrels per day compared to the previous month, reaching a total of 20.04 million barrels per day.
