Crude oil prices rose on Monday on ongoing uncertainty over the diplomatic process in the Middle East and the security backdrop across the Gulf. Oman and Iran are yet to reach an agreement over shipping conditions in the Strait of Hormuz, while disruptions persist.
The lack of clarity over the possibility of a full reopening of the waterway could leave crude prices exposed to volatility.
At the same time, ongoing threats to Saudi energy infrastructure could leave markets on edge. Security concerns in the Red Sea could keep the market exposed to more tightness risks and raise concerns over the viability of the kingdom’s alternative export routes.
This comes at a time when the market contends with low strategic reserves, offering little spare capacity to cushion any additional disruptions.
Looking ahead, prices are likely to stay sensitive to geopolitical developments in the Middle East. Confirmed progress in the Iran-Oman talks and improving shipping conditions could ease supply concerns and drag prices lower, while new incidents around Hormuz or the Red Sea could exacerbate the tightness of the physical market and extend the current upside move.
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