Global oil markets are moving from fears of supply shortages to concerns about oversupply, but analysts warn geopolitical risks could keep prices elevated.
Global oil markets are entering a new phase as easing tensions between the United States and Iran push prices lower, shifting investor focus from supply shortages to the possibility of a future surplus.
After months of elevated geopolitical risk, market sentiment has moved sharply from concerns about disrupted supply to expectations of increased availability as the Strait of Hormuz gradually returns to normal operations.
Francis Osborne, Head of Oil Consulting at Argus Media, said the market has experienced a significant change in outlook.
“Looking ahead, as geopolitical risk fades, oil market sentiment has flipped sharply from war premium to paper surplus; from crisis tightness to a headline oversupply,” Osborne said.
