By Abdelaziz Albogdady, Market Research & Fintech Strategy Manager at FXEM
Oil prices fell after remarks from Donald Trump indicating that US forces were instructed to postpone planned strikes on Iranian energy infrastructure for five days. However, the market is likely to remain highly volatile as geopolitical developments in the Middle East continue to keep traders on edge. While the latest pullback reflects easing immediate fears, the overall risk environment remains elevated, limiting the scope for a sustained decline.
Disruptions to energy infrastructure and logistics are still a key driver for the market, particularly as the Strait of Hormuz remains largely closed to most shipping traffic, constraining exports from one of the world’s most critical oil transit routes. A prolonged restriction in flows through the waterway could tighten global supply further and renew upward pressure on prices.
Looking ahead, efforts to de-escalate and reopen the Strait of Hormuz could weigh on oil prices if successful, as the return of normal shipping activity would ease supply concerns. However, risks remain skewed to the upside, and any renewed escalation or fresh threats could quickly push prices higher again, keeping volatility elevated in the near term.
