The signing of a preliminary memorandum of understanding between the US and Iran has initiated a 60-day ceasefire and the reopening of the Strait of Hormuz. Despite the diplomatic breakthrough, energy markets remain volatile as global shipping firms await the removal of naval mines from the critical waterway.
Global market
World oil prices experienced significant volatility following the signing of a 14-point peace memorandum by President Trump and Iranian President Masoud Pezeshkian. While Brent crude briefly fell below $80 per barrel on news of the de-escalation, it settled at $80.34 (+3.69%) by the end of the day, according to international market price assessments. The agreement mandates that Tehran allow toll-free shipping through the strait for 60 days, though Iran’s Persian Gulf Strait Authority (PGSA) has reserved the right to introduce “insurance fees” thereafter.
Logistical hurdles continue to impede a full recovery of the 20% of global oil and LNG that typically transits the region. Vincent Clerc, the chief executive of the shipping giant Maersk, stated that the company would not resume transit until approximately 80 naval mines are cleared from the main shipping lanes. Nevertheless, initial movements have begun, with two Iranian supertankers carrying a combined 3.8 million barrels of crude exiting the blockade zone.
Russia & CIS
Ukraine conducted a massive drone attack on Russia’s largest oil refinery, resulting in a significant fire at the facility. Amidst the ongoing conflict, Russian Central Bank Governor Elvira Nabiullina reduced the key interest rate to 14.25%, acknowledging that the strength of the ruble is negatively impacting the profits of energy exporters. In the legal sector, the GML structure representing former Yukos shareholders has exhausted all appeals, granting them the final right to pursue $50 billion in Russian state assets.
Regional energy security remains a priority in the UK, where Kemi Badenoch, the leader of the Conservative Party, has called for the government to lift bans on the development of the Jackdaw and Rosebank fields in the North Sea. This push aims to reduce long-term reliance on fuel imports from Russia and Norway.
Armenia
No material changes to domestic petrol or natural gas prices were reported in Armenia for the current period. The regional energy outlook is largely dictated by Armenia’s membership in the EAEU and the broader impact of fluctuating global crude prices. Internally, Prime Minister Nikol Pashinyan continues his campaign to dismantle the “oligarchic system,” which has led to tax-related charges against Gagik Tsarukyan, the leader of the Prosperous Armenia party.
Tsarukyan’s party failed to cross the 4% threshold in recent parliamentary elections, further weakening the political influence of the pro-Russian opposition. Meanwhile, in international sports news, Armenian Grandmaster Shant Sargsyan achieved a major victory by defeating world number one Magnus Carlsen at the World Team Rapid Championship in Hong Kong. On the domestic front, the controversial installation of a 101-meter statue of Jesus on Mount Hatis remains under construction as a proposed national tourist brand.