Ray Sharma-Ong, Global Deputy Head of Multi-Asset Client Solutions at Aberdeen Standard Investments, anticipates that oil prices will decline from current levels as long as a ceasefire holds and oil shipments through the Strait of Hormuz remain unimpeded. However, the firm also noted that it will be difficult for oil prices to return to pre-conflict levels. Aberdeen pointed out that actual logistical and shipping disruptions will not disappear overnight, and factors such as higher transport costs, war risk insurance, delays, congestion, inefficient rerouting, precautionary stockpiling, and geopolitical risk premiums will keep oil prices elevated above previous levels for some time. Sharma-Ong further indicated that markets most affected by oil price shocks and rising risk aversion are expected to see the strongest rebounds. Equity markets in Asia with high oil imports, particularly South Korea, Taiwan (China), and Japan, are likely to rebound the fastest. These markets are more vulnerable to energy price fluctuations and shifts in global risk sentiment.
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