Crude oil prices face a significant downside risk if geopolitical tensions in the Strait of Hormuz ease, with reports suggesting Brent could fall to US$70 a barrel upon stabilization of the route.
The potential price drop highlights the extent to which current energy valuations are propped up by shipping disruption fears rather than fundamental supply-demand dynamics.
The warning comes as the strategic waterway remains a focal point of global energy security concerns.
Recent incidents have underscored the vulnerability of maritime trade, with ADNOC reporting that 15 ships were attacked in the Strait of Hormuz, resulting in one crew member killed.
These events have kept a substantial risk premium embedded in oil prices, but analysts caution that this support is fragile and contingent on continued instability.
Market participants are closely watching for signs of diplomatic progress or de-escalation that could normalize flows through the chokepoint.