Markets are pricing in a normalisation in Hormuz flows, but observers say the process could take around six months

[SINGAPORE] While the price of Brent crude oil has eased by around 30 per cent in the past month on the back of optimism over the Middle East ceasefire, observers believe that the prospect of a further drop is limited.

Emily Ashford, head of energy research at Standard Chartered (StanChart), said: “Crude oil prices have been caught up in cautious enthusiasm over the memorandum of understanding, but the lag in the return of physical supply will lag the commodity price reaction.”

Between Feb 27 – the day before the US launched strikes on Iran – and Apr 29, Brent crude oil futures spiked 38.6 per cent from US$72.48 to US$118.03 a barrel. It had fallen back by as much as 33.1 per cent to US$78.96 on Jun 16.