Oil Prices Rise Amid Middle East Truce, But Future Uncertainty Remains

Oil futures have risen nearly 2% following gains of around 5% yesterday for both crudes, as markets grow more pessimistic about a deal to remove obstacles to crude flows from the region.

The continued rise in oil prices comes amid a strategic truce in the Middle East war. However, an agreement between Iran and Oman on managing the Strait of Hormuz may not be enough to prevent repeated shocks resulting from potential targeting of ships or infrastructure facilities in the region.

The absence of consensus with the United States could limit the effectiveness of this agreement if completed. Iran has imposed new conditions for opening the Strait of Hormuz, including ending the war on all fronts, a broad US withdrawal, and financial compensation.