Geopolitics Keep Oil Prices on High Alert

Oil prices have retreated from last week's spike, but several major banks believe the market remains vulnerable to renewed upside due to ongoing geopolitical tensions.

WTI crude (OIL/USD) traded around $84.16 on Monday after falling from Thursday's peak of $92.09.

MUFG argues that the recent decline reflects hopes that a temporary pause in US military action against Iran could reduce the immediate threat to oil supplies.

However, MUFG stresses that the market remains far from normal, with shipping activity through key export routes remaining well below normal.

UniCredit believes recent events have undermined one of the market's key assumptions, that Gulf producers could simply reroute exports if the Strait of Hormuz became unusable.