Brent crude prices were trading below the $85 per barrel mark today after US and Iran inked a peace deal, which would lead to an opening of the Strait of Hormuz and unclog the world trade sentiment. The oil rates slipped 5% on Monday to close at $80.75 per barrel. On Tuesday, brent crude rates stood at $82.66, marginally higher than Monday level. With markets rejoicing the peace pact, oil rates are also expected to fall further.

But there is a catch. 

There is a material risk of continued physical market imbalances causing prices to move toward and beyond $90/bbl in coming weeks, says Emkay Global. 

The brokerage expects supply normalisation delays and believes that a return of pent-up demand largely from China could put a floor on oil prices. 

"With supply normalization via Hormuz (to pre-crisis levels) expected to take weeks, if not months, there is a material risk that oil prices will slowly grind upward, toward and beyond USD90/bbl in coming weeks, if pent-up demand returns quickly," said Emkay. 

However, the brokerage believes prices should fall meaningfully and sustainably beyond 1HFY27, falling to $70/bbl by end-FY27. 

"Crucially, this does not move the needle for our baseline forecasts – With 1HFY27 likely to see elevated prices (avg: USD95/bbl; 2HFY27E: USD85/bbl), we retain FY27E Brent forecast at USD90/bbl (Oil imbalances: The price of war and resilience)," said Emkay. 

“The Deal with the Islamic Republic of Iran is now complete,” Trump said in a Truth Social post. Hormuz will open without a toll system and the US will end its naval blockade of Iran, Trump said.

“Ships of the World, start your engines,” Trump said. Let the oil flow!”

Later, Trump in a post, said that the strait would open on Friday, the day the official peace agreement signing ceremony is set to be held in Switzerland.

“With the opening of the Strait upon the signing of the Deal on Friday, for purposes of mine removal, oil will flow on both ends again for the Region, and the World!” he said.