Brent Drops to $80 After Iran Deal as ECB Keeps Another Rate Hike Priced
Updated
Updated · ING Think · Jun 15
Brent Drops to $80 After Iran Deal as ECB Keeps Another Rate Hike Priced
3 articles · Updated · ING Think · Jun 15
Summary
Brent crude has fallen from near $100 to almost $80 a barrel in less than two weeks after the Iran deal was signed, with markets now watching whether shipping through the Strait of Hormuz actually normalizes.
US and euro rates have eased only modestly because traders see the oil shock’s inflation damage as largely already absorbed and expect reserve rebuilding to keep energy demand and volatility elevated.
US 10-year Treasury yields are still hovering around 4.45%, with real yields just above 2%, while 10-year inflation breakevens have already slipped back to about 2.3%, near pre-war levels.
In Europe, 10-year EUR swap rates remain near 3% even after oil’s drop, and the ECB’s recent hike plus hawkish comments have left a second increase more than fully priced by year-end.
The broader takeaway is that lower oil has reduced re-escalation fears, but bond markets are not returning to pre-war yield levels unless shipping proves durable and growth weakens materially.