Oil and natural gas markets remain sensitive to developments surrounding the Strait of Hormuz. If a deal is reached, we wouldn’t expect energy prices to collapse immediately as it will likely take some time for tanker traffic and, in turn, oil output to rebound. Beyond this year, though, we think a recovery in Middle East crude output would lead to the return of a large surplus in the oil market which would weigh on prices in 2027 and 2028. For prices of European natural gas and Asian LNG, we think prices will also fall back over the same timeframe, albeit more slowly reflecting the lasting damage to Qatar’s LNG export infrastructure.
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