📝Markets Growing Sceptical Of Hormuz Reopening: Danske Bank

We forecast Brent crude to average USD100/bbl in Q2, before falling to USD90/bbl in Q3, further to USD80/bbl in Q4. and rising to USD85/bbl next year. We expect Brent to trade well above the pre-war level of USD60-70/bbl even after a reopening of the Strait of Hormuz.

Prediction markets are increasingly sceptical of the near-term outlook for a reopening of the Strait of Hormuz. If/when it opens again, it will likely take some time, probably a couple of months, for production and exports from the Gulf Region to recover. The longer it remains closed, the longer it will likely take for the supply situation to normalise.

The exit of the UAE from OPEC may potentially trigger a price war in the oil market after the strait opens again.

We assume a reopening happens during Q3, which would pave the way for a gradual decline in oil prices for the rest of the year. If central banks tighten monetary policy too much, oil prices would drop more than what we expect. - Danske Bank