Oil prices rebounded on Monday, recovering part of last week’s decline as uncertainty surrounding negotiations between the United States and Iran continued to push the market to the upside.
Although both sides exchanged revised proposals, the absence of a clear breakthrough and renewed incidents in the region reinforced concerns that restrictions affecting the Strait of Hormuz could remain in place for longer than previously expected, keeping prices elevated.
At the same time, the physical market remained tight, which could leave prices exposed to strong swings and could make a return to previous peaks possible if diplomatic talks break down.
Looking ahead, oil markets are likely to remain highly sensitive to developments surrounding the ongoing negotiations.
While a successful agreement could eventually help push prices down, the reopening of shipping routes and normalisation of energy flows would likely be gradual. As a result, supply concerns may continue to provide support for prices even if diplomatic progress is achieved.
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