Oil jumps as renewed tensions fuel geopolitical uncertainty

Oil prices rebounded on Monday, reversing the previous session’s losses as geopolitical tensions in the Middle East increased once again.

The rebound followed rising concerns that the Strait of Hormuz could remain disrupted for a longer period and that diplomatic talks were under threat.

This shift comes after a brief period of optimism late last week, when assurances of open passage through the Strait of Hormuz had triggered a sharp selloff in crude prices.

Looking ahead, oil markets are likely to remain highly sensitive to geopolitical developments in the Middle East. Elevated tensions could continue to drive prices higher, while any credible de-escalation or restoration of stable shipping conditions could trigger another sharp sell-off.

Volatility could remain elevated amid the current uncertainty. Additionally, the physical market continues to see a significant tightness, which could leave the market exposed to big surges if no resolution is reached and energy exports from the Middle East remain limited.