Oil prices could remain under pressure amid hopes of a diplomatic breakthrough in the Middle East, Paolo Broccardo, CEO at BankPro, said in a market analysis sent to Rigzone on Friday.
“Expectations that current talks could help set a course toward a complete resolution and a reopening of the Strait of Hormuz could continue to fuel downward pressure on the market,” Broccardo added.
The BankPro CEO went on to state, however, that crude prices could remain at risk of a strong rebound in case of any setback in the diplomatic talks.
“The physical market remained tight with the Strait of Hormuz still severely disrupted,” he highlighted.
“The waterway usually accounts for 20 percent of the global crude supply, and the current situation has resulted in a significant shortfall since the beginning of the tensions,” he said.
Broccardo noted in the analysis that, while a reopening of the Strait could help return supplies from the Middle East to the global market, volumes could return gradually to their previous levels over several weeks and potentially longer, which he said could leave oil prices elevated to a certain extent as conditions improve.
“In the meantime, the market could remain prone to volatility as traders react to the situation on the ground and the progress in negotiations,” Broccardo stated.
“As a result, any new developments and changes in tone from the U.S. and Iranian governments could significantly affect sentiment and the direction of the market,” he warned.
In a separate statement sent to Rigzone today, Naeem Aslam, CIO Zaye Capital Markets, highlighted that Brent and WTI had eased from recent highs above $100 “amid a clear unwind of the geopolitical risk premium”.
“The pullback reflects improving sentiment around Middle East stability, including ceasefire developments and expectations of a potential resolution to the Iran situation, which have reduced perceived supply risks tied to the Strait of Hormuz,” he said.
“Despite easing geopolitical pressure, downside remains limited by resilient demand conditions, supported by stable economic data and strong banking sector performance,” he added.
“At the same time, ongoing supply disruptions and a still-tight global balance continue to underpin prices,” he continued.
Aslam outlined in the statement that Zaye Capital Markets sees oil “consolidating within the $90-$100 range, with near-term direction driven by diplomatic progress, policy signals, and evolving supply expectations”.
In a BMI report sent to Rigzone by the Fitch Group on Friday, analysts at BMI, a unit of Fitch Solutions, highlighted that futures prices for Brent crude “have remained under pressure”.
“Despite the failure to reach a framework agreement for a U.S.-Iran peace deal during the Islamabad talks, the diplomatic track remains open,” the BMI analysts said in the report.
“Futures pricing reflects a highly sanguine outlook on the outcome of these talks and is masking severe strains in the underlying physical market for both crude oil and refined fuels,” they added.
The BMI analysts pointed out in the report that, for crude alone, around 400 million barrels of production has already been lost as a result of the conflict and warned that the cumulative impact will continue to grow every day the war drags on.
“Pressures [in] downstream are growing even more acute, as reflected in extremely elevated prices for refined fuels such as jet fuel, diesel and bunker fuel,” the BMI analysts said.
The BMI analysts revealed in the report that they are holding on to their forecast for Brent crude futures to average $78 per barrel in 2026 but noted “significant risks to the outlook, both to the upside (in the case of an extended conflict scenario) and to the downside (in the case of a nearer-term resolution and/or continued disconnects between the prices for physical and financial markets)”.
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