WTI rally slows down as Tehran leaves door open to diplomacy

West Texas Intermediate traded around $81.30 on Monday, down 0.54% on the day as investors took some profits following the benchmark crude oil’s sharp rally in recent weeks. Despite the modest pullback, geopolitical tensions in the Middle East continue to provide underlying support to crude prices amid concerns over potential disruptions to supplies. The conflict between the US and Iran remains the main driver of market sentiment. The US continued its military strikes against Iranian targets, while Tehran has maintained its hardline stance over the Strait of Hormuz, a strategic shipping route for global energy exports. Any prolonged disruption to traffic through the waterway could significantly tighten world oil supply. However, markets also received signs that diplomatic efforts remain underway. Iranian Foreign Ministry spokesperson Esmaeil Baghaei said Tehran pursues both military and diplomatic approaches based on its national interests, rejecting the notion that the two are mutually exclusive. He also confirmed that intermediaries have exchanged messages with Iranian officials in recent days in an effort to reduce tensions, suggesting that backchannel diplomacy remains active despite the ongoing hostilities. Analysts at ING believe the oil market remains highly vulnerable to further supply shocks. The bank notes that tanker traffic through the Strait of Hormuz continues to face significant disruptions, while the expected end of releases from the US Strategic Petroleum Reserve could leave the market more exposed to supply risks. ING also highlighted that speculative investors significantly increased their net long positions in ICE Brent last week, reflecting persistent bullish sentiment despite elevated market volatility. For now, oil prices remain caught between easing hopes provided by ongoing diplomatic contacts and persistent concerns that any further escalation in the Middle East could quickly reignite fears of supply disruptions and renewed upside pressure on crude prices. (Source: OANDA) The post WTI rally slows down as Tehran leaves door open to diplomacy appeared first on Financial Mirror.