With the US-Iran agreement reached, will oil prices collapse?

The peace agreement between the US and Iran is close to being reached and plans to reopen the Strait of Hormuz, which is the main reason for the drop in international oil prices. Longzhong Information oil analyst Wu Yan said that although there are still differences between the two sides on some key issues, the preliminary agreement on peace has released long-awaited positive expectations to the market after multiple rounds of mediation. Jinlianchuang crude oil analyst Han Zhengji believes that if the US and Iran finally reach an agreement, with the decline of geopolitical risk premium, international oil prices will further fall. However, if the situation between the US and Iran escalates again, oil prices will rise again. In addition, this conflict has led to a significant reduction in oil production in Gulf countries due to force majeure. Han Zhengji believes that even if geopolitical tensions ease, it will be difficult for crude oil production to recover overnight. He predicts that before oil production in major oil-producing countries returns to normal levels, the market's focus will still be on the supply and demand fundamentals of the oil market. With the current oil market still in a situation of insufficient supply, oil prices may remain relatively high in the short term. Wu Yan expects that from June to August, Brent crude oil futures will fluctuate in the range of $87 to $110 per barrel. "Currently, there is approximately a 680,000-barrel supply gap per day globally, and the oil production in Iraq, Kuwait, and the United Arab Emirates is basically at a standstill. In addition, the northern hemisphere will enter the summer fuel demand peak season, and commercial crude oil inventories will decrease rapidly." Wu Yan believes that this will provide support for fuel demand and international oil prices.