Oil prices edged lower on Monday as markets weighed early signs of potential de-escalation in the Middle East against ongoing supply disruptions, Konstantinos Chrysikos, head of customer relationship management at Kudotrade, said in a market analysis sent to Rigzone on Monday.
“Reports of a possible agreement between the United States and Iran to halt hostilities and reopen the Strait of Hormuz have tempered supply concerns to a certain extent and pushed prices down,” Chrysikos said in the analysis.
“At the same time, OPEC+’s decision to raise output quotas could favor a decline in oil prices when tensions recede and oil exports return to normal levels. In parallel, a potential resumption of Iraqi exports could also weigh on the market if they materialize,” he added.
Chrysikos went on to warn, however, that underlying conditions remain fragile.
“Vessel transit through the Strait remained limited,” he pointed out.
“Looking ahead, oil prices are likely to remain highly sensitive to geopolitical developments in the Middle East,” he added.
“While any sustained progress toward a ceasefire could weigh on prices, the fragile security backdrop and ongoing disruptions suggest that any downside may be limited for now,” he said.
Rigzone has contacted the White House and the Iranian Ministry of Foreign Affairs for comment on Chrysikos’ analysis. At the time of writing, neither have responded to Rigzone.
A statement posted on OPEC’s website on Sunday revealed that Saudi Arabia, Russia, Iraq, UAE, Kuwait, Kazakhstan, Algeria, and Oman have decided to boost production by 206,000 barrels per day next month.
A statement posted on OPEC’s website on March 1 revealed that these countries had decided to boost production by 206,000 barrels per day in April. Another statement posted on OPEC’s website on February 1 revealed that the eight countries had “reaffirmed their decision on 2 November 2025 to pause production increments in March 2026 due to seasonality”.
In a comment sent to Rigzone on Monday, Naeem Aslam CIO at Zaye Capital Markets, noted that markets were opening the week “on the back foot as rising Iran linked geopolitical risk and a sharp uptick in oil prices reintroduce inflation concerns just as rate-cut hopes fade”.
“After last week’s strong rebound, this pullback looks less like a reversal and more like a reset – driven by profit-taking, elevated bond yields, and pressure on growth sectors,” he added.
“With sentiment now highly headline-sensitive, the near-term direction will hinge on geopolitics and energy price stability, keeping markets cautious, reactive, and range-bound,” he went on to state.
In another comment sent to Rigzone today, Aslam outlined that the oil price was “elevated, highly reactive, and vulnerable to sharp moves in either direction depending on how quickly rhetoric turns into reality”.
In a BMI report sent to Rigzone on Friday by the Fitch Group, BMI analysts revealed that they were revising up their 2026 Brent forecast to $78 per barrel from $70 per barrel, “reflecting a shift from our previous base case of a short, intense conflict to an ‘extend to end’ scenario lasting up to eight weeks”.
“A longer conflict increases the threat to physical infrastructure, prolongs disruptions through the Strait of Hormuz, and implies a slower post-war recovery, with impacts extending later into the year,” the BMI analysts warned.
In that report, the analyst noted that Gulf producers have cut upstream output by more than 10 million barrels per day, “while flows through Hormuz have collapsed, leaving a deficit of 13 million barrels per day or more”.
The BMI analysts said in the report that they see downside risks from an earlier than expected end to the conflict, stronger demand destruction, and the possibility that Brent remains buffered from tighter physical markets. They added, however, that escalation remains the key upside risk.
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