-Thadeu Dos Santos, Regional Director at Infinox
“Crude oil prices edged lower on Friday after Thursday’s sharp rise, but the market remains highly sensitive to developments in the Middle East and the risk of further supply disruptions. Reports that Washington urged restraint on additional strikes against Iranian energy infrastructure, alongside discussions among U.S. allies on measures to help secure transit and ease bottlenecks around the Strait of Hormuz, have helped temper immediate fears. In parallel, the International Energy Agency (IEA) agreed to a coordinated release of around 400 million barrels from strategic reserves, adding a near-term buffer to supply expectations.
However, the underlying risk backdrop remains tense. Shipping and transit around key regional routes continue to face heightened uncertainty, and the market remains focused on the potential for sustained disruptions to physical flows. With geopolitics still driving risk premia, oil prices are likely to stay volatile and headline-sensitive. Elevated energy prices continue to feed inflation risks globally, encouraging markets to reassess the path of monetary policy and keeping attention on how central banks interpret the balance between growth and price stability. A persistent oil shock could keep inflation expectations supported, with implications for rates and FX via higher yields and a firmer dollar backdrop, while a sustained easing in energy stress would help reduce near-term pressure. Looking ahead, oil markets are likely to remain driven by geopolitical headlines and the evolution of supply constraints. Coordinated interventions can improve sentiment at the margin, but prolonged disruptions or renewed escalation could keep prices elevated and volatility high.”
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