After weeks of escalating tensions and a seesaw political game in the Middle East, Iran and the US have finally agreed to a peace deal that will likely open up the Strait of Hormuz this week and bring much-needed relief to oil prices. Amid the renewed optimism, Nomura expects oil marketing companies (OMCs), city gas distributors (CGDs), and Petronet LNG to benefit the most.
Oil prices have already declined sharply amid the developments. Brent crude futures have fallen below $83 per barrel, after soaring above $120 per barrel earlier this year. "We believe oil prices have already priced in part of the de-escalation over recent weeks as ceasefire talks progressed. Also, since the actual reopening of the Strait of Hormuz may still be 30 days away, no immediate changes are expected in terms of physical flow of oil over the next 30 days. In the near term, once oil flows through the Strait of Hormuz normalise, we expect oil prices to continue to grind lower as the war risk premium fully unwinds,” according to Nomura.
