Oil Prices Rebound on Diplomatic Hopes Amid Elevated Supply Risks

Oil prices have pulled back after reaching highs last week due to concerns over Saudi exports. However, supply-side risks remain elevated, according to analysts at ING Bank. The recent decline in crude oil prices was largely attributed to higher-than-expected shipments through the Strait of Hormuz.

The US Treasury Secretary Scott Bessent threatened Iranian airlines with a 'shut-down' by refusing them fuel and services, adding to tensions between the US and Iran. This verbal escalation has weighed on oil prices despite hopes for peace talks.

ING's commodities strategists Warren Patterson and Ewa Manthey noted that supply-side risks remain elevated, citing a fresh supply concern in Libya where an armed group shut down a pipeline, reducing output at the Sharara field to 127,000 barrels per day from 340,000 bpd.