Hari warns that "potential hiccups" between the U.S. and Iran have been overlooked: File Image/Pixabay

With hopes rising for a return to stability in the energy markets due to the impending peace deal between the U.S. and Iran, oil on Wednesday continued to drop: as of 0800 GMT Brent for August delivery dipped nearly 1 percent to $78.24 per barrel, the lowest price since March 3.

Tamas Varga, an analyst at PVM Oil Associates, noted that “Over the last four trading sessions, Brent has fallen by $17, a discernible vote of confidence that the worst, at least as far as supply disruptions are concerned, is behind us.”

However, an earlier comment made by Vandana Hari, founder of Vanda Insights, who said  a lack of detail on what has been agreed was "likely to inject unease and uncertainty into the market" seemed to be the case with regards to sentiment among oil analysts this week.

Hari added that while the weekend’s announcement of the U.S. and Iran’s memorandum of understanding (MOU) has brought relief, the “hardest part, on delivering the pledges and promises, is yet to come…Crude’s slide is entirely sentiment-driven,” and she went on to stress that “potential hiccups from logistics to renewed geopolitical tensions are not being adequately factored in.”

John Jeffrey, CEO, Saturn Oil & Gas, was equally guarded in his outlook, stating that oil’s price plunge “feels over like an overreaction to me, only because all this [MOU] does is gives them 60 days to work on a deal."

Mark Parsons, chief economist at ATB Financial, agreed, adding, “There is a lot of hope right now that the Strait [of Hormuz] is reopening, that the tide has turned, and it is very positive news; but it doesn’t change the fact that we’ve been in this situation for four months now, and it’s going to take time to replenish those inventories.”

For his part, Al Salazar, vice-president of intelligence at Enverus, predicted that “Prices will start to grind higher as there’s a realization that we’re dealing with a low stock situation; shortages still may occur over the summer driving season,” and he expected Brent will average about $110 per barrel through the rest of the year, with West Texas Intermediate trading about $5 below that level.