The oil market has just experienced its sharpest weekly correction since 2022, with Brent and WTI falling by roughly 11%. This drop followed the announcement of a two‑week ceasefire between the United States and Iran, which temporarily eased tensions and triggered a pullback in the geopolitical risk premium. Brent contracts ended the week around USD 95.20 and WTI around USD 96.57, after weekly declines of 12.7% and 13.4% respectively. The move was amplified by hopes of a partial restart of maritime traffic in the Strait of Hormuz, even though flows remain below 10% of their normal volume, with ships still forced to navigate under Iranian oversight.
Despite this pullback, prices rebounded on Friday, underscoring how nervous the market remains. Traders are increasingly concerned about ongoing supply risks: persistent attacks in the region, damaged infrastructure, the near‑total blockage of the strait, and uncertainty surrounding the actual implementation of the ceasefire. Iran is now demanding transit fees from commercial vessels, a condition firmly rejected by the United States and international authorities, further complicating the prospect of a lasting agreement. Diplomatic talks scheduled for the weekend will be crucial in assessing whether a more stable easing of tensions is possible. Until then, the market remains highly sensitive to any shift in tone, aware that the slightest breakdown in the ceasefire could trigger a violent price rebound.
From an investment perspective, this episode highlights the deeply binary nature of the oil market. Diplomatic easing can trigger rapid corrections, but underlying fundamentals remain tight: Hormuz flows are still largely paralyzed, risks to Saudi infrastructure persist, and uncertainty remains over the ability of regional actors to secure supply routes. Volatility is likely to stay elevated as long as maritime traffic fails to normalize and the ceasefire’s conditions remain unclear. For investors, the current environment is a critical observation point: a durable agreement could extend the recent pullback, while a breakdown in negotiations would immediately restore a significant risk premium.