By Joseph Dahrieh, Managing Director at Tickmill
Oil prices staged a rebound on Thursday, as markets grappled with conflicting signals surrounding diplomatic efforts in the Middle East. While US officials continue to point to open negotiation channels, Iran denied any progress and its stance on maintaining control over the Strait of Hormuz has injected renewed uncertainty into the outlook. The divergence in narratives has unsettled market sentiment, reversing part of the recent downside driven by optimism over a potential diplomatic breakthrough.
Fundamentally, the continued absence of tanker traffic in the Strait of Hormuz is materially constraining crude flows, exacerbating supply tightness amid concerns about the duration of the disruptions. Looking ahead, oil markets are expected to remain highly reactive to incoming geopolitical developments. In the absence of clear progress toward de-escalation or a normalization of shipping activity, price action is likely to stay volatile, with risks skewed to the upside as supply concerns persist.
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