Return to pre-crisis oil and gas supplies months away even if strait of Hormuz reopens

Markets welcome US-Iran peace deal but prices may stay high as buyers race to refill depleted emergency crude stockpiles

After more than 100 days of the greatest recorded disruption to the world’s energy supplies, the global oil and gas markets have breathed a sigh of relief.

Hours after Donald Trump confirmed that a US-Iran peace deal would lead to the reopening of the strait of Hormuz to tankers carrying millions of barrels of oil and gas, the price of Brent crude tumbled to lows of $83 a barrel . Wholesale gas prices fell about 6%.

The international oil benchmark remains well above the $69 a barrel average recorded last year but the slump from $126 a barrel at the peak of the crisis could mean that the global economy avoids the worst-case consequences predicted in the early days of the Iran war.

The 11th-hour deal has emerged weeks before the oil market was forecast to enter a “red zone” in which soaring summer demand during the travel season was expected to collide with fast-depleting crude stockpiles.

But even as the market exhales after weeks of unprecedented disruption, uncertainty remains: a return to pre-crisis normalcy is months away and relies on the cooperation of the Iranian regime with the White House.

In the US, where Trump faces midterm elections later this year, soaring road fuel prices through the summer driving season represented a real political risk to the Trump administration .

“Trump has to sell this at home as a victory,” said Bjarne Schieldrop, the chief commodities analyst at SEB. When the deal is finalised , US consumers can expect “lower gasoline price and maybe US republicans survive the midterm elections”, he said.