Oil Prices Set to Test US$60 Lows by End-2025 After Israel-Iran Ceasefire

June data shows a surge in supply from Persian Gulf states, including Iran

- Ovais Subhani

Tensions in the Middle East may linger, but oil prices for the rest of the year have only one way to go—down.

Fears of a supply cut failed to materialize during the so-called 12-day war between Israel and Iran, which was deemed to have ended with a ceasefire on June 24 following an unprecedented US air strike on the Islamic Republic's nuclear facilities on June 22.

In fact, ship movements and export data through the conflict-ridden month of June show a surge in supply from Persian Gulf states, surprisingly including Iran, which bore the brunt of the exchange of hostilities.

After hitting a high of around US$80 a barrel on June 20, the market consensus on the price target for Brent futures is shifting from around US$70 before the conflict to as low as US$60 by end-2025.

The global oil benchmark last traded at US$66.82 in early Asian trade on June 27.

As oil prices fell last week, the cost of shipping Middle East crude to Asia—its largest market—also declined by 17 per cent to 55.50 Worldscale points, which is equivalent to about US$1.60 a barrel.

Lower-than-expected oil prices will influence prices of the overall energy complex, directly for petroleum products such as petrol for transport and indirectly on liquefied natural gas (LNG) shipments which are mostly used to produce electricity.

Cheaper energy costs can also alleviate leftover concerns over an inflationary spike and allow central banks to further ease interest rates to boost consumption and economic growth threatened by US tariffs.

To be sure, none of this means that geopolitical risks in the Middle East have dissipated. Indeed, the ceasefire—literally imposed by the US on Israel and Iran—is on rocky ground.