Oil is rising because geopolitical risk is again adding a supply premium to the market, especially around Iran, the Strait of Hormuz, and shipping security.
That’s what Naeem Aslam, CIO at Zaye Capital Markets (ZCM), said in a market analysis sent to Rigzone on Monday. In the analysis, Aslam outlined that ZCM analysts see crude “trading less on simple demand expectations and more on the risk that any disruption to energy routes could tighten physical supply quickly”.
“President Trump’s comments are directly influencing oil sentiment because the market is reading his Iran position as unfinished negotiation risk,” Aslam said in the analysis.
“His demand that Iran never holds a nuclear weapon, that Hormuz remains open with unrestricted shipping in both directions, and that no money will be exchanged until further notice keeps traders focused on energy security,” he added.
“The additional signal that oil and gas prices could come down quickly after the Iran war ends also matters because it links crude prices directly to the outcome of geopolitical de-escalation,” he continued.
Aslam also noted in his analysis that OPEC and IEA signals are creating a mixed oil backdrop.
“OPEC has cut its 2026 demand growth forecast to 1.17 million barrels per day from 1.38 million barrels per day, pointing to softer expected demand,” he pointed out.
“However, the IEA reported global oil supply fell another 1.8 million barrels per day in April to 95.1 million barrels per day, with total losses since February at 12.8 million barrels per day,” he added.
“This means the market is facing weaker demand forecasts, but also real supply pressure, which helps explain why oil can rise even when growth concerns remain,” he continued.
Aslam went on to state that recent economic data also shapes the demand story.
“Core PCE eased to 3.78 percent on a 3-month annualized basis but stayed above the two percent target, corporate profits rose 12.0 percent year over year in Q1 2026 while revised GDP growth stood at 1.6 percent, and April goods trade deficit narrowed to $82.4 billion from $85.3 billion as exports rose 4.0 percent to $219.7 billion and imports rose 1.9 percent to $302.1 billion,” he said.
“Today, FOMC remarks, ISM Manufacturing PMI, and ISM Manufacturing Prices will decide the next move: stronger PMI and higher prices can lift crude through demand and inflation pressure, while weaker data can pull oil lower unless Hormuz risk continues to dominate,” he added.
In market commentary sent to Rigzone on Friday, Neil Crosby, Head of Research at Sparta Commodities, said a reopening of the Strait of Hormuz “now appears, according to the market, closer than in previous rounds of negotiations”. He added, however, that “many remain very skeptical about the viability”.
Ole S. Hansen, Head of Commodity Strategy at Saxo Bank, highlighted an “energy retreat” in a report sent to Rigzone on Friday.
In that report, Hansen outlined that the Bloomberg Commodity Total Return Index was heading for a monthly loss of around three percent, “trimming its year to date gain to 26 percent”.
“The setback marks the first monthly decline since December but does little to alter the broader picture of commodities remaining one of the strongest-performing asset classes in 2026,” he said in that report.
Hansen noted that “the biggest driver behind the monthly decline in the commodity complex was energy reflected in the BCOM Energy TR Index heading for a loss of around eight percent, with Brent crude, WTI crude, diesel and gasoline all suffering double-digit declines”.
“The move follows growing optimism that the United States and Iran may be able to extend their ceasefire agreement, potentially creating the framework for a gradual reopening of the Strait of Hormuz,” he added.
“While significant hurdles remain, the market is reacting to the prospect of a supply surge once hundreds of tankers loaded with crude oil and refined fuels are released from the Persian Gulf,” he continued.
Hansen pointed out in the report that, “following the record 43 percent monthly surge back in March”, Brent crude was “heading for its largest monthly decline since April last year with prices falling towards a five-week low, yet still higher by around 29 percent since Operation Epic Fury began three months ago”.
“The market is increasingly looking beyond current disruptions and focusing instead on what a reopening could mean for supply,” he added.
“Hundreds of tankers loaded with crude oil and refined fuels remain stranded or delayed across the Persian Gulf region, creating expectations that a successful agreement could trigger a substantial release of supply,” he said.
However, Hansen warned in the report that markets may be underestimating the time required to restore normal conditions.
“While a ceasefire may reopen shipping lanes, it does not immediately replenish inventories, restore damaged infrastructure or normalize trade flows,” he highlighted.
Hansen also noted that the world has “relied on several shock absorbers to prevent a much larger energy crisis”.
“These include record U.S. crude exports, strategic petroleum reserve releases, increased pipeline exports from Saudi Arabia and the UAE that bypass Hormuz, reduced Chinese imports and some demand destruction driven by elevated prices,” he pointed out.
“As these buffers diminish, several industry participants continue to warn that underlying market tightness remains significant. While the geopolitical risk premium may be fading, the structural supply deficit that emerged during the conflict has not disappeared,” he added.
Hansen went on to state in the report that, for that reason, the eventual floor under oil prices may settle well above pre-conflict levels.
“While front-month Brent futures traded sharply lower this week, the average price for 2027 held steady near $80, around 17 percent above the pre-war level, highlighting a market pricing in higher for longer oil prices,” he said.
In another report sent to Rigzone on Friday, Bjarne Schieldrop, Chief Commodities Analyst at Skandinaviska Enskilda Banken AB (SEB), said market hopes were “clearly high that we are now on a road to some kind of resolution”.
“A renewal of the 60-day truce seems likely. A return to full war and bombing has been a low probability all since the first truce began in early April as both the U.S. and Iran had reached their points of maximum threats and pain,” he added.
Schieldrop went on to warn in that report of a “potential oil price rally in July/August” if the Strait of Hormuz stayed shut.
“There seems to be increasing consensus that global crude and product prices will skyrocket in July/August with Brent crude rising to $150-200 per barrel if the Strait of Hormuz stays shut,” he said.
Rigzone has contacted the White House and the Iranian Ministry of Foreign Affairs for comment on Aslam, Crosby, Hansen, and Schieldrop’s statements. At the time of writing, neither have responded to Rigzone.
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