Oil prices are likely to remain volatile as geopolitical risks continue to dominate the market narrative.
The extension of the ceasefire could offer temporary relief; however, ongoing disruptions in the Strait of Hormuz are maintaining a tight supply environment and reinforcing underlying price support.
Uncertainty around the next phase of the current diplomatic talks remains elevated.
Should negotiations continue to stall, the market could increasingly price in a scenario where disruptions to the Strait of Hormuz persist for an extended period. This would create upside pressure on prices amid constrained supply.
Repeated incidents in the Strait are also fuelling concerns, particularly for maritime logistics. Shipping flows remain vulnerable, and any escalation could further limit hopes of a swift resolution.
At the same time, the extension of US waivers allowing purchases of sanctioned Russian oil could partially offset the impact of Middle Eastern supply disruptions. This alternative flow may help ease immediate supply tightness to a certain extent. but it is unlikely to remove the risks associated with prolonged instability in one of the world’s most critical energy chokepoints, which could leave the market exposed to new surges.
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