Oil prices stabilized to a certain extent after their decline from a peak. Markets could remain sensitive to the developments in the Middle East.
Cautious optimism around a potential extension of the US-Iran ceasefire against persistent supply constraints could continue to fuel some uncertainty and volatility risk.
Signals that the truce would be extended to allow further negotiations could weigh on oil prices to a certain extent.
However, the physical backdrop remains restrictive. The Strait remained closed, sustaining concerns over global supply availability. A prolonged closure could tighten the market further. At the same time, in the event of a resolution and opening of the Strait, the return to normal shipping conditions and to previous production levels could take time and leave oil prices elevated for longer.
Looking ahead, the market could remain exposed to some volatility according to the developments on the ground. As such, any setbacks could fuel another surge in prices.
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