Today’s market analysis on behalf of Ahmad Assiri Research Strategist at Pepperstone

(MENAFN- Your Mind Media ) US President expressed a notably pessimistic view on negotiations with Iran over the nuclear agreement, underscoring the imperative to prevent Iran from developing a nuclear weapon. At the heart of the dispute lies Ir’n’s retention levels of enriched uranium, an approach the US flatly rejects. Consequently, the American delegation will abstain from the previously intended meeting on Sunday. Simultaneously, the evacuation of US embassy non-essential personnel in Iraq posts has reinforced perceptions of elevated tension, or even the possibility of a military manoeuvre intended to underscore US and Israeli resolve on the nuclear issue.In energy markets, these developments were priced in almost immediately. Brent crude jumped over 5%, climbing from its 50-day moving average near $66 per barrel to around $70, as traders priced in the risk of supply disruptions through the Strait of Hormuz. Although prices eased slightly from intraday peaks, the geopolitical premium remains pronounced, Brent is trading above levels seen on April 4, undeterred by broader headwinds such as trade tariffs and their dampening effect on global growth, or OPEC+ production increases led by Saudi Arabia, which appears intent on boosting market share.Taken together, these factors signal genuine concern over a potential resurgence of instability in the Middle East. Geopolitical risk has been vaulted back to the forefront after a period of relative easing following earlier positive developments in the region. Yet the recent rhetoric has prompted market participants to reevaluate those earlier assumptions.
From the oil ma’ket’s standpoint, future performance hinges on two primary drivers. First, the inherently unpredictable geopolitical dynamic, now leveraged as a bargaining chip by the US administration, demands close monitoring since shift in diplomatic posture or regional tensions could alter the supply outlook. Second, the economic backdrop, oil demand appears stronger than anticipated a month ago, supported by ongoing signals of global growth and only muted inflationary impact from tariffs. With the headline CPI, including energy components, running around 2.4% year-on-year, the direct effects of tariffs on inflation have so far been limited, reducing the odds of a recession scenario relative to prior forecasts.Crucially, this combination underpins continued growth in oil demand that outstrips consensus expectations. The market has so far absorbed OPEC+ output increases that have, over the past three months, tripled initial forecasts. Nonetheless, the latest price surge remains dominated by geopolitical concerns, which will likely continue to drive volatility unless signs of de-escalation or concrete political moves emerge. From a cross-asset perspective, sustained higher oil prices could feed into inflation expectations, influence central bank calibration, benefit energy-sector equities and commodity-linked currencies, while weighing on consumer discretionary segments and growth sensitive assets.In my view, the prospect that this tension will be used as a negotiation lever remains strong. The interplay between geopolitical manoeuvring and underlying demand strength suggests that oil market dynamics will remain prone to swings and traders should factor in the likelihood of volatility tied to shifts in regional risk.

MENAFN12062025006667014463ID1109664137