Optimism Rises that Oil Prices Will Drop & Trump’s Meeting w/ Xi Rescheduled
Oil Prices Outlook
Oil has always been a large factor in international shipping costs. The Iran War, with the closure of the Straight of Hormuz, effectively cut off shipping access through the Persian Gulf to 20% of the world’s oil. No surprise, that meant a sharp rise in oil prices.
Before the war began, the world’s top oil price benchmark, Brent Crude, which prices about two-thirds of the world’s internationally traded oil, averaged oil prices around $67-$72 per barrel. Spiking prices after the Iran War began peaked on March 9th at $119.50, as recorded by Brent Crude. Yesterday, that number fell below $100, as reported by Tom Ozimek in the Epoch Times:
The global oil benchmark fell below $100 a barrel in early trading on March 25 as investor sentiment turned more optimistic about the prospect that a U.S.-led diplomatic effort might bring about an end to the Iran war, which has choked off Gulf oil supplies and driven sharp price swings in energy markets.
Though oil prices falling under $100 yesterday was more of a dip than a steady downward trajectory, prices are staying much closer to $100 than the near-$120 peak.
While oil prices remain volatile, there is optimism for them to come down significantly, and soon. The immediate fall or rise of oil prices is tied to the Iran War. Whether current attempts by the Trump Administration to negotiate an end to the conflict with Iran succeed or the military superiority the U.S. (combined with Israel) has already demonstrated finishes Iran’s ability continue fighting, this is clearly not the kind of “forever war” we’ve seen too often in the Middle East.
Iran’s ability to keep the Straight of Hormuz closed is diminishing. Just today, Israel announced the death of Iran’s navy commander who oversaw the Strait of Hormuz blockade. Olivia Allhusen reported on it in an MSN article:
Iran‘s navy commander who oversaw the Strait of Hormuz blockade has been killed in an Israeli airstrike.
Israeli Defense Minister Israel Katz announced Alireza Tangsiri’s death in a video statement on Thursday.
He said: ‘Last night, in a precise and lethal operation, the IDF eliminated the commander of the Revolutionary Guards’ navy, Tangsiri, along with senior officers of the naval command.
‘The man who was directly responsible for the terrorist operation of mining and blocking the Strait of Hormuz to shipping was blown up and eliminated.’
On top of that, 22 nations have declared readiness to help reopen the Strait of Hormuz for safe commercial shipping passage. They include NATO members, the UK, France, Germany, Italy, and the Netherlands; global allies of the U.S. Japan, South Korea, Australia, New Zealand, and Canada; and Middle East regional countries the United Arab Emirates (UAE) and Bahrain.
Meanwhile, analysts saw an excess of supply in the oil market just before the Iran conflict began. That was creating low projections for oil prices in 2026. Even in light of the Iran War, projections have oil coming down significantly.
The day before the U.S.-Israel strikes on Iran started, J.P. Morgan projected Brent Crude coming down to $60 per barrel this year. Even after the conflict, J.P. Morgan’s projections have oil prices coming down quite a bit from where they currently are to $80 per barrel by the end of the year, as reported by Reuters. The article cited other big hitters as also raising oil price projections in light of the Iran War but still getting to significantly lower prices than we’re currently seeing:
Goldman Sachs raised its Brent crude oil forecast for 2026 to $85 a barrel from $77, citing prolonged disruptions in Strait of Hormuz shipments and increased strategic stockpiling that are tightening the market.
A few others the Reuters article lists are BofA’s projection of $77.50 per barrel up from $61, BMI projecting $70 per barrel up from a projected $67 per barrel price by the end of the year, and Citi expecting $71 per barrel up from a previous $63 prediction. The highest listed adjusted projection for Brent Crude to drop to in 2026 comes from Standard Charter at $85.50 per barrel. That projection was adjusted from $70 per barrel.
Ultimately, even with the Iran war, I couldn’t find a major analyst projecting oil prices to remain as high as they currently are. And falling prices could happen sooner rather than later this year. Plus, maritime regulators should be keeping an eye on oil bunker related fees ocean freight carriers charge shippers.
Presidents Trump and Xi’s Meeting Rescheduled
A quick update to Universal Cargo’s March 17th post about President Trump postponing his trip to China: his trip to meet with President Xi Jinping has been rescheduled for May 14–15.
White House Press Secretary Karoline Leavitt announced the dates to the press yesterday, and President Trump posted about it on Truth Social:
My meeting with the Highly Respected President of China, President Xi Jinping, which was originally postponed due to our Military operation in Iran, has been rescheduled, and will take place in Beijing on May 14th and 15th. First Lady Melania and I will also host President Xi and Madame Peng for a reciprocal visit in Washington, D.C., at a later date, this year. Our Representatives are finalizing preparations for these Historic Visits. I look very much forward to spending time with President Xi in what will be, I am sure, a Monumental Event. Thank you for your attention to this matter!
