By Abdelaziz Albogdady, Market Research & Fintech Strategy Manager at FXEM
Oil prices remained relatively volatile and continued to react to geopolitical developments, while caution remains high. The developments of the Geneva talks between the US and Iran will be closely monitored after a previous round of discussions in Oman. The outcome is expected to be a strong driver for the market in the near-term.
A breakdown in these talks or any escalation in rhetoric or military activity in the region could fuel the geopolitical premium and push prices higher. Tensions were already evident yesterday when Iran conducted naval drills near the Strait of Hormuz following the US deployment of a second aircraft carrier ahead of the nuclear talks. Conversely, any signs of diplomatic progress could alleviate concerns over the supply from the region, potentially weighing on oil prices.
Beyond geopolitics, future supply expectations remain a crucial influence, particularly regarding the possibility that OPEC+ could increase output from April. The market is increasingly pricing in a shift where OPEC+ prioritizes market share, a move that could exacerbate the 2026 supply surplus projected by the IEA and could weigh on prices.