Energy and Oil Sector

Crude jumped to $70-73 per barrel after the U.S. and Iran agreed to halt attacks and allow ships through the Strait of Hormuz again (CNBC). But here's the catch: analysts say markets are ignoring how fragile things really are. Insurance companies won't cover ships at pre-war rates for months, shipping costs remain sky-high, and Iran now has something it never had before—leverage over one of the world's most critical oil chokepoints. Think of it like a highway that was closed for months; just because the barricades came down doesn't mean everyone will immediately feel safe driving it again.

Before the war, Iran had zero control over the Strait of Hormuz, the narrow waterway between Iran and Oman where about one-third of world's seaborne oil passes (CNBC). Now Tehran is using its geographic position to demand coordination or payment—essentially treating it like the Suez Canal, which charges tolls. Western companies refuse to pay Iran directly (sanctions risk), so shipping firms are getting creative: some are turning off ship tracking systems and dodging the area entirely. This isn't going away; Iran's leverage is structural and permanent.

The Middle East produced 14.6-15 million barrels per day in June, recovering from shutdowns during the war, but global oil inventories (think of these as reserve tanks) are still far below normal (OilPrice.com). Every country and oil trader in the world will now buy oil to refill these depleted reserves, which could absorb an extra 2-3 million barrels daily for months. This acts like a floor under prices—buyers will snap up available oil even if geopolitical risks ease. Strategists at BNP Paribas expect oil to trade between $75-85 by 2027, bounded by this inventory-rebuilding demand below and a reluctance to pay above $85 above.