Oil prices fall despite continuing tensions
As the conflict between Israel and Iran entered its sixth day, oil markets witnessed a slight decline in prices, as Brent and West Texas Intermediate crude fell by 0.6% to around 76 dollars and 73 dollars per barrel, respectively.
Although geopolitical tensions remain high, the market seems skeptical about the ability of prices to rise without concrete evidence of supply disruptions, especially with key oil infrastructure still unaffected.
Strait of Hormuz: possible breaking point
The Strait of Hormuz remains the biggest concern for traders, as almost 20 million barrels per day pass through it, about a third of the world's seaborne oil trade.
Any closure of this vital corridor could push prices to record levels exceeding USD 100 per barrel, and may extend to levels of USD 120 or more per barrel according to forecasts.
In the event of such a scenario, the spare production capacity of OPEC countries will not be enough to compensate for the shortage, especially since most of them are concentrated in the Persian Gulf region, which may also be affected by the conflict.
US intervention: it will be a new escalation
factor Fears of a direct US military intervention are escalating after President Donald Trump called on Iran to unconditional surrender, hinting at possible strikes.
This escalation may further complicate the situation, especially with previous Iranian threats to target US bases and their ability to paralyze navigation in the Strait.
Strategic oil reserves: a temporary solution
In the event of a supply shock, governments may resort to withdrawing from their strategic oil reserves, but this solution will be limited in Impact and time The markets are also currently ignoring the warnings of some banks, such as Goldman Sachs, which expects prices to return to 55-59 dollars by the end of 2025 in the absence of supply disruptions.
The impact of the Fed's monetary policy
Against the background of these events, investors are waiting for the decision of the US Federal Reserve on Wednesday, especially after previous signals of fixing interest rates with the possibility of lowering them twice in 2025.
A more hawkish approach may increase the pressure on oil-importing emerging markets, while it may support the dollar and weaken demand for crude.
In the end, the oil market is between the hammer of tensions and the anvil of supplies, where any geopolitical or economic development can overturn the equation overnight.
