Brent is above $80 and gold falls with the test of the Hormuz agreement economy

Oil prices rose in early trading on Friday, after US Vice President J.D. Vance’s statements regarding Israel restored some risk premium to the market, at a time when traders are awaiting the durability of the temporary agreement between the United States and Iran and the return of shipping traffic through the Strait of Hormuz to normal.

Brent crude futures rose by 0.55% to $80.29 per barrel at the time of writing these lines, and US West Texas Intermediate crude rose by 1.75% to $77.94 per barrel, after a volatile session yesterday, Thursday, in which Brent ended trading up 0.38% to $79.85, while US crude closed down 0.25% at $76.60.

The move came after Vance warned Israel against launching further attacks on the Iranian-backed Lebanese Hezbollah group in Lebanon, raising doubts about the steadfastness of the ceasefire and the de-escalation agreement in the region. Partner at Igen Capital John Kilduff said that the US Vice President’s statements “may have brought tension back to the market,” adding that any disturbance, even limited, will be reflected in prices.

Before Vance’s statements, Brent crude had fallen to its lowest level since March 2, the first trading day after the start of the US-Israeli strikes on Iran, while West Texas Intermediate crude had touched the lowest level since March 4, with fears of supply shortages receding after oil tankers returned to sailing through the Strait of Hormuz.

Hormuz Agreement

The attention of the oil markets is focused on the Strait of Hormuz, through which about 20% of global oil supplies passed before the outbreak of the Israeli-American war on Iran. Kilduff said that the return of oil flows through the strait has been fully absorbed in prices, warning that any new decline in flows will pose a problem for the market.

The memorandum of understanding, consisting of 14 items, begins a negotiation period lasting 60 days during which Iran allows ships to pass without fees through the Strait of Hormuz. The agreement calls for traffic through the Strait to be restored to full capacity within 30 days, while postponing more complex files, most notably the Iranian nuclear program, to later stages.

According to Reuters, analysts expect a gradual recovery in flows through the Strait of Hormuz, but experts in the sector do not expect a sharp drop in prices, with the recovery of global demand and the continued refilling of stocks. Goldman Sachs said that Gulf region exports may return to pre-war levels by the end of July, with crude production recovering by October.

Bank forecasts

Goldman Sachs estimated that the return of exports to pre-war levels requires an increase of about 13 million barrels per day in flows through Hormuz from current levels to 70% of pre-war levels, which makes the path of prices dependent on the speed of the return of shipping traffic and the ability of producers to raise supplies in a stable manner.

BNP Paribas said in a note that it does not currently expect prices to return to pre-war levels, suggesting that the level of $75 per barrel will constitute a floor for prices in the foreseeable future, due to the existing losses in supplies and increased demand. Brent prices had traded between $60 and $70 per barrel in the first two months of the year before the outbreak of the Iran war.

In the same direction, Citibank expects oil prices to decline over the next 6 to 12 months, reaching between $60 and $65 per barrel by the first quarter of 2027, with flows through the Strait of Hormuz returning to normal after the interim agreement enters into force and the United States lifts the blockade imposed on Iran.

On the demand side, a report published by the PetroChina Research Unit stated that China, the second largest oil consumer in the world, may consume 753 million tons of oil in 2026, a decrease of 4.9% from 2025, amid an increasing shift to new energy sources and the pressures of rising oil prices.

Squeeze the gold

In the precious metals markets, gold declined and headed towards recording a third weekly loss in a row, under pressure from the rise of the dollar and signals tending to monetary tightening issued by the US Federal Reserve, as the rise in the US currency reduces the attractiveness of gold to buyers who hold other currencies, while expectations of higher interest rates put pressure on the metal, which does not generate a return.

Spot gold fell to $4,139.62 per ounce at the time of writing these lines, and US gold futures contracts fell by 2% to $4,160.82 per ounce, compared to higher levels in early trading, after the dollar remained near its highest level in a year.

Spot silver fell to $64.06 per ounce, platinum fell to $1,661.03, and palladium fell to $1,241, while silver futures fell by 3.31%, platinum contracts fell by 1.61%, and palladium contracts fell by 2.01%, with continued pressure on the dollar and changes in the pricing of war risks in commodity markets.

Aside from Hormuz, geopolitical risks remained present in the energy market, after drones launched by Ukraine targeted an oil refinery in the Russian capital for the second time this week, in what Kiev described as a demonstration of its growing capabilities.