Brent Crude Drops Below $88 a Barrel After Possible Iran-US Deal Announcement

A Technical Rally Rather Than a Trend Reversal

The movement observed between June 11 and 12 remains of low amplitude considering the recent trajectory of crude oil. Brent was still trading at high levels yesterday as Tehran announced the closure of the Strait of Hormuz and Washington threatened to strike Iranian targets « very hard."

Statements by Donald Trump about his intention to take control of Iranian oil and gas infrastructure had then strengthened the risk premium embedded in the barrel price. Overnight announcements of the strikes being canceled and the possible opening of negotiations led to a retreat to $88/barrel at the beginning of the Asian session.

However, crude oil flows transiting through Hormuz remain vulnerable, and global stocks are situated at the low end of their recent range, limiting the extent of the decline. The market currently treats this episode as a breather, in line with the movement already observed the day before, when Brent was already retreating around $91 despite the strikes.

Energy, Air Transport: The Geopolitical Risk Premium in Question

The sensitivity of Paris-listed stocks to the price of oil remains high. A sustained drop in Brent would mechanically lighten the fuel bill for airlines like Air France-KLM and impact the upstream revenues of TotalEnergies, whose refining and production margins are correlated with the trajectory of crude oil.

Conversely, the geopolitical component of the price remains substantial as long as the situation in the Middle East is not stabilized. Equipment manufacturers and aircraft makers like Airbus, whose airline clients are affected by changes in jet fuel costs, remain indirectly exposed to these fluctuations.

The context is also marked by supply tensions outside the Gulf region: according to Reuters, around twelve Russian regions report fuel shortages linked to Ukrainian strikes on logistics infrastructure, notably in Crimea. However, this information comes from conflict zone sources and carries a higher degree of uncertainty than usual official statistics.

Inflation and Monetary Policies: An Ever-Unstable Balance

The movement in oil prices comes as price pressures have recently strengthened. According to the Bureau of Labor Statistics, U.S. CPI inflation reached 4.2% year-on-year in May, with a 0.5% monthly increase, while core inflation stood at 2.9%. The same institution reported a rise in the producer price index (final demand) of 1.1% for the month and 6.5% over the year, marking its highest annual increase since November 2022.

In the eurozone, the HICP stood at 3.2% year-on-year in May according to Eurostat, prompting the ECB to raise its deposit rate by 25 basis points to 2.25% during its decision on June 11. The institution's central projections now forecast inflation at 3.0% in 2026, 2.3% in 2027, and 2.0% in 2028, revised upward in the short term due to a higher path of energy prices.

In this context, any sign of easing in crude prices relieves the burden on central banks, while a resumption of tensions would tighten it. Market expectations regarding the Fed and the ECB's trajectory can shift quickly based on upcoming macroeconomic data and official statements, and a breakdown in negotiations between Washington and Tehran, or a major military incident, could abruptly reverse the easing observed in Brent prices.