Oil Price Volatility May Persist Despite US-Iran Peace Deal, Analysts Warn

While markets cheer the tentative U.S.-Iran peace deal, oil-price volatility could persist in the near term, analysts say.

Global oil inventories, which have declined to low levels due to the prolonged closure of the Strait of Hormuz, will need time "to be rebuilt and are likely to fall further before new supplies begin to arrive from the Gulf," according to a note from Westpac.

"While an easing in global tensions is welcome news, the devil remains in the detail and hence uncertainty is likely to remain elevated," the bank added.

Even if flows from the Strait of Hormuz could normalize today, around 800 million barrels of inventories into November will likely be lost, which could then apply pressure on the market, Bart Melek, the global head of commodity strategy at TD Securities, said on CNBC's "Squawk Box Asia."

Higher oil prices are still "very much in the cards and all the inflationary implications that brings along," though some massive spikes in oil prices may be prevented if China chooses to stop drawing on its inventories at some point, Melick said.

"The market is quite relieved that we're having a deal, but I think we're not of the woods yet," he added.

In addition, the economic effects from the Middle East conflict have already begun to have an impact on the most vulnerable parts of the economy, Global Chief Investment Officer at HSBC Private Bank and Premier Wealth Willem Sels said on CNBC's "Squawk Box Asia."

"We will see challenging economic data, especially from countries in South Asia that are the most affected, that again I think will cause mark-to-market volatility," Sels said.

Asian markets have been buoyed by risk-on sentiment on Monday on lower oil prices after Iran and the U.S. appear set for a deal to reopen the Strait of Hormuz.

International benchmark Brent crude futures for August fell 4.87% to $83.06 a barrel.

U.S. West Texas Intermediate futures for July dropped 5.71% to $80.03 per barrel.