Oil remained under pressure on Tuesday, even as renewed military activity in the Middle East reminded the market that any recovery in supply conditions is unlikely to be straightforward.
Negotiations between the United States and Iran are still moving forward, but recent developments were enough to show that a definitive resolution may still take time.
Even if a broader agreement is eventually reached, the physical market is unlikely to rebalance immediately.
Disruptions have already had a lasting impact on production and logistics, which means the current tightness in supply could persist for longer than headline optimism might suggest.
From here, oil is likely to remain highly sensitive to geopolitical headlines and any signals around the recovery of physical flows. Continued progress in negotiations could keep prices under pressure, but with supply normalisation still likely to be slow, the downside may remain limited in the near term.
From a technical perspective, oil continues to trade within its range, reflecting the uncertainty that still surrounds the broader geopolitical backdrop and the timing of any meaningful recovery in physical flows. From a portfolio perspective, we remain flat on oil and continue to focus on a rising stock market.
With all three major indices now at record highs, the broader message from the market remains constructive. The S&P 500 and Nasdaq 100 led the move by setting fresh highs in April, and the Dow 30 completed the picture last week by breaking out to a new record high of its own. Against that backdrop, our focus remains on buying and compounding the strongest stocks in the most robust sectors, particularly where leadership continues to outperform the index.
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