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Global Oil Prices Retreat as US-Iran Ceasefire Eases Supply Fears, TPH Says

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Global oil prices pulled back from a spike late last week, as easing geopolitical tensions following a pause in direct US-Iran strikes outweighed fresh friction in the Bab el-Mandeb Strait and ongoing disruptions to key Middle Eastern trade routes, according to TPH Energy Research in a Monday note.

Matt Portillo, analyst at TPH Energy, said Brent crude futures hovered at about $88.20 per barrel, retreating from a peak of $96.80/bbl hit on Friday.

The pullback follows optimism surrounding potential peace talks and indications that further immediate escalation has been averted.

However, energy markets remain on edge. TPH analysts said that while US and Iranian officials have paused hostilities, Saudi-Houthi tensions escalated last week.

The Houthis implemented a naval blockade in the Bab el-Mandeb Strait, targeted two Saudi oil tankers, and launched strikes at Saudi oil infrastructure, which were successfully defended, following a retaliatory strike by Riyadh.

Flows through key regional arteries remain complicated. Transits through the Strait of Hormuz are significantly depressed, and about 4 to 4.5 million barrels per day of Yanbu oil exports must be rerouted.

TPH said two Chinese tankers laden with Saudi crude recently managed to transit the Strait, market participants are grappling with logistical bottlenecks, as fully laden Very Large Crude Carriers are unable to pass through the Suez Canal, forcing alternative routes that more than double transit times.

Portillo said as the corporate earnings season kicks into gear, energy executives and investors are parsing industry results for deeper insights into the macroeconomic landscape across upstream and oilfield services sectors.

On the oilfield services front, recent commentary from Halliburton (HAL) and Liberty Energy (LBRT) indicates that analyst expectations for pressure pumping price gains were overly optimistic, pointing instead to more modest growth.

Meanwhile, upbeat commentary on deepwater markets from Halliburton and SLB (SLB) continues to reinforce a broader industry preference for international exposure over North American onshore Lower 48 plays.

On the upstream gas front, early results from EQT (EQT), Range Resources (RRC), and Ovintiv (OVV) highlighted a growing focus on longer-term supply and demand dynamics through the coming decade.

Though near-term market fundamentals face lingering headwinds looking toward 2027, long-only investor interest has begun to pick up.

TPH analysts highlighted that both EQT and RRC have maintained a prudent stance on supply growth as new demand sources develop. A primary catalyst for outperformance last week was EQT's announcement of a 10-year supply agreement to power generation facilities, linked to PJM power market pricing rather than local in-basin benchmarks.

Price: $32.58, Change: $-0.78, Percent Change: -2.35%

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Most exports depart for Asian markets, and so any halt in flows through the Bab el-Mandeb Strait will only cause "minimal logistical disruptions for Asian buyers."Kpler's Das said Bab el-Mandeb carries only a small share of UAE crude exports, with flows totaling about 17,000 b/d in April, 65,000 b/d in May, 63,000 b/d in June and roughly 39,000 b/d in July.Those shipments represented less than 2%-3% of the UAE's total crude exports of roughly 2.5 million b/d to 3 million b/d, while most Murban cargoes destined for Asia bypass the Red Sea entirely, Das said.Kpler data estimated that combined Middle East crude imports into China, India, South Korea, Japan, Singapore and Thailand fell from about 13.4 million b/d in January to below 7 million b/d in April before partially recovering by July.China's imports alone dropped from more than 5 million b/d in January to roughly 1.4 million b/d to 2.4 million b/d during the worst months, before dark-routing capacity helped restore some lost flows, according to Das.In a normalization scenario, Das said that a verified US-Israel-Iran ceasefire, a Houthi halt to attacks and a recovery in visible Strait of Hormuz traffic would provide the clearest signal for prices to normalize.Murban's premium could narrow within one to three weeks, while Brent and West Texas Intermediate may need four to eight weeks to stabilize, Das added.Argus also expects clear commitments from the US and Iran to end hostilities, restore safe navigation and increase shipping traffic before Brent-Murban spreads and crude prices return to more typical levels.On any signals that Murban-Brent spreads are normalizing, Ng said that, given the uncertainty surrounding broader risks tied to the Middle East, de-escalation would require clear statements from the US and Iran.