Barclays: Oil market faces three scenarios after US-Iran agreement, with oil prices likely to continue declining in a bearish situation

⑴ Barclays stated that after the United States and Iran reached an agreement and as geopolitical risks ease, the oil market faces three possible scenarios. In a bullish scenario, normalization of trade supply through the Strait of Hormuz may drive a rebound in consumption and trigger inventory replenishment, while logistical bottlenecks would delay a full recovery in supply, thereby pushing up oil prices.⑵ Analysts from the bank stated that a second, more balanced outcome is that oil prices will stabilize after an initial decline as the market adapts to expectations of increased supply and a lower risk premium. Iranian exports would recover only gradually, which would help keep oil prices above pre-conflict levels.⑶ In a more bearish scenario, as traders expect more crude oil from Iran as well as increased production from Saudi Arabia and the UAE, crude oil prices will continue to fall. Barclays stated that even if spot volumes grow slowly, merely the expectation of future supply would push down crude oil prices.