Rystad sees US-Iran deal lowering oil shock risk but leaving market volatility intact

By Romel S. Gurky

A memorandum of understanding (MOU) between the United States and Iran has reduced the risk of an immediate oil market shock but is unlikely to eliminate geopolitical uncertainty surrounding the Strait of Hormuz, according to Rystad Energy.

Rystad Energy's Head of Geopolitical Analysis Jorge Leon said the agreement represents a de-escalation rather than a resolution, with key issues including Iran's nuclear program and the long-term status of the Strait of Hormuz left to a 60-day negotiation period.

The consultancy raised the probability of a limited US-Iran agreement to 55%, up from 40% previously. Under this scenario, Iranian sanctions would be gradually eased and oil flows through the Strait of Hormuz could recover to around 10 million barrels per day (bpd) by January 2027. However, a residual geopolitical risk premium of US$5 to US$10 per barrel is expected to remain.

Rystad lowered the likelihood of a full resolution to 10% from 25%, citing the difficulty of reaching a comprehensive agreement on the nuclear issue within the 60-day timeframe. In that scenario, Strait of Hormuz flows could recover to around 14 million bpd by January and most geopolitical risk premiums would disappear.

The firm assigned a 25% probability to a stalemate scenario, where the ceasefire holds but no comprehensive deal is reached. Under this outcome, flows through the Strait would recover only partially to about 5 million bpd by late 2026, while another 5 million bpd would be routed through bypass infrastructure. Oil prices would continue to carry a geopolitical premium of around US$10 per barrel.

The probability of renewed conflict has been reduced to 10% from 25% following the MOU signing. If negotiations collapse and military action resumes, Rystad estimates oil could carry an additional risk premium of US$15 to US$20 per barrel while flows through the Strait remain severely constrained.

Rystad said the recovery of tanker traffic through the Strait of Hormuz is expected to be gradual even under constructive scenarios, as shipowners, insurers and logistics operators rebuild confidence following the disruption.

According to the consultancy, the market is likely to shift from "crisis pricing" to "negotiation pricing," with lower immediate disruption risks but continued exposure to geopolitical uncertainty.

Editing by Alexander Ginting