$120–$130 If Tensions Persist, $150 If Disruptions Deepen: Why Oil Prices Will Stay Elevated Even After the Iran-US Ceasefire

West Texas Intermediate fell 16.6% on Wednesday. Brent Crude dropped 15.9%. Murban crude declined 18.9%. The trigger: Donald Trump announcing a two-week ceasefire and a pledge to restore navigation through the Strait of Hormuz.

The relief rally is real. But the market’s message is more nuanced than the headline price drop suggests. Spot crude continues to trade at a $20–$30 premium to futures — a structural signal that immediate supply tightness has not resolved. The geopolitical premium is not gone. It is embedded.

What the Ceasefire Actually Changes

The two-week ceasefire pauses roughly 40 days of conflict between the US and Iran. Iran’s Foreign Minister Abbas Araghchi has indicated that safe passage through the Strait of Hormuz will be maintained during the truce. That conditional compliance reduces immediate disruption risk — which is why prices fell sharply on the announcement.

But the ceasefire does not resolve the underlying dispute. It does not reopen the Strait permanently. It does not address the structural questions about Iran’s nuclear programme, its regional influence, or the terms under which a durable agreement might be reached. It is a pause, not a resolution.

“Markets have been primed for this moment. Positioning had become defensive, volatility was elevated, and energy prices were reflecting worst-case assumptions. A pause, even a temporary one, releases that pressure very quickly,” said Nigel Green of deVere Group.

Why the Geopolitical Premium Remains

The key insight from market analysts is that the ceasefire has not removed the risk — it has reduced the immediate probability of the worst-case scenario. Those are different things.

“Oil is unlikely to return to previous lows quickly. The geopolitical premium is now embedded. Even with de-escalation, traders will price in the risk of renewed disruption,” Green added.

Crude remains significantly higher on the year, following gains of more than 60% during the conflict. The two-week window is now the critical variable: if it leads to a broader agreement, the premium may gradually compress. If it does not, the current pullback reverses quickly.

The upside scenarios are stark. Analysts see $120–$130 per barrel if tensions persist, and $150 or higher if disruptions deepen. Estimates suggest disruptions could affect up to 10% of global oil supply and as much as 20% of gas flows.

OPEC+ and the Supply Response

OPEC+ plans to raise output by 206,000 barrels per day from May. Analysts say the increase is unlikely to offset potential losses if flows through Hormuz are disrupted again. The group retains flexibility to adjust output if market conditions worsen — but flexibility is not the same as capacity to replace Hormuz-dependent supply at scale.

The spot-to-futures premium of $20–$30 reflects this reality: the market is paying a significant premium for immediate delivery because the risk of future supply disruption remains priced in.

What Markets Are Watching Now

The relief rally has shifted market attention from immediate disruption risk to compliance and diplomatic progress. Two questions dominate: Does shipping through the Strait of Hormuz normalise as promised during the two-week window? And does the fragile truce pave the way for a more durable agreement?

“A relief rally of this magnitude reflects how stretched sentiment had become. Investors were bracing for escalation that could have choked off a fifth of global oil supply. Remove even part of that threat and capital flows back into equities at speed,” Green said.

“Yet the mood remains one of cautious optimism rather than outright celebration,” said Tim Waterer of KCM Trade. “The ceasefire is only two weeks long, and markets will be watching closely.”

Shunyatax Global Insight

The oil market’s response to the ceasefire is a masterclass in the difference between price and risk. Prices have fallen. Risk has not.

For Indian businesses, the practical implications are unchanged from last week. India is one of the world’s largest oil importers. Energy costs across manufacturing, logistics, aviation, and supply chains are elevated and will remain elevated until a durable Hormuz resolution emerges. The two-week ceasefire creates a window of reduced immediate pressure — but it does not change the planning horizon for businesses that need to manage energy cost exposure over months, not days.

The businesses that navigate this environment best are those that have already built scenario-based financial frameworks — that have modelled the $120, $130, and $150 scenarios and have operational responses ready. The ceasefire gives you two weeks. Use them to prepare for what comes after.

🔍 Is your business financially structured for an oil market that could move sharply in either direction within two weeks? Get a free strategy call with Shunyatax Global →

Quick News Summary

Oil prices fell sharply on April 8 — WTI -16.6%, Brent -15.9%, Murban -18.9% — following Trump’s announcement of a two-week Iran-US ceasefire and pledge to restore Hormuz navigation. Iran’s Foreign Minister indicated conditional compliance. However, spot crude continues to trade at a $20–$30 premium to futures, reflecting embedded geopolitical risk. Analysts see $120–$130 if tensions persist and $150+ if disruptions deepen. OPEC+ plans a 206,000 bpd output increase from May but analysts say it cannot offset Hormuz disruption at scale. Markets are now watching whether the two-week window leads to a durable agreement.