Canadian petroleum producers and energy experts believe it will take months to bring crude prices back down to earth after a six-week liftoff, even after oil markets plummeted Wednesday following a ceasefire being unveiled in the Middle East war.

A drop of more than US$18 a barrel for benchmark U.S. oil prices was a “knee-jerk reaction” to the latest political development, but there are still important issues to clarify, said Al Salazar, vice-president of intelligence at energy analytics firm Enverus.

Markets have shifted into a higher price band since the start of the war in late February, and it’s unclear who controls the critical Strait of Hormuz and when shipments from the Persian Gulf can significantly ramp up.

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“Call it a repositioning,” Salazar said of Wednesday’s sharp price drop.

“It doesn’t take away from the fact that you still have physical shortages of oil in Asia and Europe . . . Pre-war normal is still maybe three to six months out.”

After previously vowing to bomb Iran “back to the stone ages” if it didn’t reach an agreement with the United States by Tuesday evening, President Donald Trump announced the countries had consented to a “double-sided” ceasefire.

The president said he would suspend attacks on Iran for two weeks while terms of the agreement are finalized, although there were already signs the accord is fragile.

Prices for U.S. benchmark West Texas Intermediate (WTI) crude, which shot up to more than $112 earlier this........

© Calgary Herald