Oil Prices Recover as Renewed US-Iran Tensions Revive Geopolitical Risk

(MENAFN- MENAFNEditorial)

Oil prices rose on Tuesday, recovering part’of the previous session’s steep decline, as renewed military activity around the Strait of Hormuz brought geopolitical risk back into focus. The US confirmed strikes on Iranian military targets on Qeshm Island, which Washington described as defensive measures aimed at preventing attacks on commercial shipping. The developments came just as markets had started to price in potential diplomatic progress.

So far, the rebound has recovered only a fraction of Monda’’s losses, as market participants rebuilt part of the geopolitical risk premium without fully pricing in extensive military operations. However, the latest US strikes risk derailing mediation efforts and bringing the prospect of further military escalation back into focus. Shipping conditions through the Strait of Hormuz remain strained, leaving prices sensitive to both diplomatic developments and the risk of further escalation.

Looking ahead, markets will monitor any decisions after t’day’s US midterm elections and any change in Wash’ngton’s approach in the Middle East. Any indication that the US is prepared to resume broader military operations would reinforce supply concerns and potentially push prices back towards recent highs. Conversely, concrete progress in negotiations, particularly an agreement covering maritime access through Hormuz, would place additional selling pressure on prices. Until then, uncertainty over shipping security and the risk of further military action are likely to keep oil prices supported.

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