Brent crude is on track for its largest weekly loss in two months, sliding nearly 10% to around $92 per barrel. The collapse comes as markets price in a potential 60-day ceasefire extension and a temporary agreement to reopen the Strait of Hormuz, a critical chokepoint for global oil shipments. The deal, reportedly close to being finalized, would sharply ease fears of a prolonged supply blockade.
The supermajor behind the $160 warning — cited in a report published two hours ago — argues that even with millions of barrels in global storage, the system remains fragile once working stocks run thin. The analysis, which draws an analogy to blood pressure, suggests that circulation, not total volume, is the binding constraint. JPMorgan had previously calculated that the global market holds 8.4 billion barrels, but warned that operational minimums could be breached quickly.
India's central bank added a note of caution: in its Annual Report for 2025-26, the Reserve Bank of India said a prolonged West Asia conflict poses downside risks to growth and upside risks to inflation. India, a major crude importer, relies heavily on stable Gulf supply routes. The RBI noted that while India's economy remains resilient, the near-term oil shock threatens to dent macroeconomic momentum.
Geopolitically, the outcome hinges on whether US President Trump and Iran's Supreme Leader Khamenei agree to the proposed navigation deal. Analysts are divided; some see the ceasefire extension as a genuine de-escalation, while others warn that tensions could reignite if negotiations stall. A temporary reopening of Hormuz would restore roughly 20% of global seaborne crude flows.
Counterargument: Some analysts argue that the supermajor's $160 forecast is alarmist and that strategic petroleum reserves and demand destruction would cap any price spike well below that level, particularly if the ceasefire holds and tankers resume normal passage through the strait.