By Li Xing, Financial Markets Strategist Consultant to Exness
Oil prices were volatile, but remained elevated, as markets reacted to geopolitical uncertainty. Markets could remain on edge ahead of the US deadline for Iran to reopen the Strait of Hormuz. The absence of progress on the diplomatic front could reinforce concerns that disruptions to one of the world’s most critical oil transit routes could persist.
At the same time, OPEC+’s efforts to increase output could help push crude prices down once tensions in the region recede and export capacity is back to normal levels. In the meantime, the possibility of seeing Iraqi oil exports back on the market could weigh on prices. Iraq signalled it could rapidly restore production and exports to previous levels once safe passage through the Strait is guaranteed, which could help reduce the tightness of the market.
Looking ahead, oil markets are likely to remain highly reactive to geopolitical developments. Any breakthrough and re-opening of the Strait of Hormuz could help restore export flows and trigger a potential correction.
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