Oil Poised for Weekly Gain, Market Wary of Iran
Oil prices are on track for a weekly gain of more than 5%, driven by growing market concerns over potential US military action against Iran if nuclear negotiations fail to reach an agreement. This geopolitical risk has led market participants to re-assign a higher "risk premium" to prices.
US President Donald Trump said Iran has approximately 10-15 days to reach a deal. According to ING analysts, failure to reach an agreement within that timeframe could potentially trigger US military action against Iran, although the market is still weighing the scenarios and their scale.
According to ING, the "key questions" are: if military action occurs, how long will it last, and what its ultimate goal will be. This uncertainty is important because the duration and target of the operation will determine its impact on oil supplies, shipping routes, and global risk sentiment.
In early trading, Brent and WTI were flat at around $71.64/barrel and $65.88/barrel, respectively. Although stable, these positions remain close to their highest levels in about six months, indicating that the market is reluctant to let go of its risk premium.
ING assesses that increased uncertainty in the next two weeks could cause oil prices to retain an additional "cost of risk." This means that oil movements could be more sensitive to headlines, even without major changes in daily fundamental data.
Against this backdrop, the oil market is expected to remain reactive: news of progress in negotiations could cool prices, while signals of escalation could widen the risk premium and keep oil at a high level.
Source: Newsmaker.id
