Oil market remains tense over Iran, Strait of Hormuz tensions

Global oil prices continue to fluctuate amid volatile Middle East. Investors are closely watching developments around a fragile truce between the US and Iran and are also awaiting the outcome of a crucial summit in China between President Donald Trump and Chinese President Xi Jinping, Reuters reported.

Against this backdrop, oil prices fell. Brent crude futures fell $1.22, or 1.1%, to $106.55 a barrel. Meanwhile, US West Texas Intermediate (WTI) crude fell $1.16, or 1.1%, to $101.02 a barrel.

Despite the recent decline, the market remains extremely tense. After the US and Israel launched attacks on Iranian territory in late February, and Tehran effectively blocked the Strait of Hormuz, both major oil benchmarks have mostly held above the psychological level of $100 per barrel.

Senior analyst at Phillip Nova Priyanka Sachdeva stressed that the main factors supporting oil prices remain the risks of supply disruptions and general uncertainty in the Middle East region. According to her, it is currently difficult for market participants to determine a clear direction for further price movement.

The expert also noted that the market reacts extremely sharply to any news or signals coming from the Middle East. Because of this, sharp fluctuations in oil prices may continue. She emphasized that any new escalation of the conflict or the emergence of a direct threat to the supply of energy resources can quickly return the strong growth in prices for both Brent and WTI.

The day before, on Tuesday, oil prices had already shown a sharp increase of more than 3%. Thus, the market extended the previous rally after optimism about a possible long-term ceasefire between the United States and Iran began to weaken.

An additional factor in the tension was the situation around the Strait of Hormuz - one of the key routes for the global energy market. It is through this waterway that about a fifth of global oil and liquefied natural gas supplies pass. Uncertainty about the possible resumption of shipping through the strait continues to increase concerns among traders and investors.