-- The two-week ceasefire between the US and Iran may have capped the upside risk for speculators, but for the refiners scrambling for available barrels, the crisis is far from over, market experts have said.
June Brent futures have retreated below $100 per barrel following the ceasefire announcement. Yet, on water, the global benchmark for immediate delivery, Dated Brent, remains stubbornly pinned above $120.
This $20-plus premium reveals a desperate global scramble for wet barrels that financial models failed to predict. "The issue was never production; it's deliverability," said David Jorbenaze, commodities analyst at ICIS.
Jorbenaze added that because refining and petrochemical units take three to six months to safely ramp up, the global downstream system will remain tight long after crude begins to flow.
Despite the diplomatic breakthrough, shipowners remain paralyzed by war-risk insurance premiums, disrupted tanker rotations, and the lingering threat of Iranian transit fees in the Strait of Hormuz.
Experts warned that the market cannot simply flick a switch to restore supply.
Robert Rennie, Head of Commodity and Carbon Research, said that while rhetoric has softened, the physical system remains "severely impaired," leading to a massive dislocation where North Sea grades like Forties have traded as high as $147.
Even with the ceasefire holding, ANZ analysts expect only a partial recovery of 2-3 million barrels per day in the near term, with a credible risk that 1-2 mb/d of capacity may be permanently lost due to infrastructure damage.
Michael Connolly, head of refining and base oils analytics at ICIS noted that while de-escalation has eased sentiment, underlying fundamentals have not reset. "Markets normalise when barrels move - not when announcements are made," he added.
The current price discrepancy highlights a fundamental failure in the forward curve. Matt Marshall, president at Aegis Hedging, suggested that financial models often underestimate the "physical squeeze" created by acute buying interest.
For refiners needing to fill a vacuum in their immediate schedule, the crisis is far from over, Marshall noted.