• Oil prices rebound after two sessions of losses, supported by a temporary easing of geopolitical fears surrounding Iran.
• Concerns about potential supply disruptions in the Middle East have receded, though they have not disappeared entirely.
• Expectations of a global supply glut continue to cap the upside potential in the Oil market.

West Texas Intermediate (WTI) US Oil trades around $59.80 per barrel on Friday at the time of writing, up 1.60% on the day. The Crude Oil is recovering part of the ground lost over the previous two sessions as investors reassess geopolitical risks in the Middle East following more cautious remarks from the White House regarding Iran.

US President Donald Trump said he had stepped back from the threat of military action after receiving assurances that no further executions would take place and that violence would subside. According to several sources cited by Reuters, Israel and other regional allies also urged Washington to delay any intervention, fearing retaliation that could destabilize the region. These developments have helped reduce, at least in the near term, the geopolitical risk premium embedded in Oil prices.

This improvement in sentiment comes after markets had feared a rapid escalation that could disrupt Iranian Oil production or affect key shipping routes in the Gulf. Iran remains a major player within the Organization of the Petroleum Exporting Countries (OPEC), and any significant interruption to its supply would have immediate repercussions on the global market balance. However, several analysts note that geopolitical risks have not fully disappeared, keeping investors on alert.

Despite this geopolitical support, market fundamentals continue to weigh on the medium-term outlook for WTI US Oil. Many analysts maintain a cautious, or even bearish, stance due to expectations of ample supply in 2026, despite earlier OPEC projections pointing to a more balanced market. Recent data on US crude inventories have also revived concerns about oversupply, against a backdrop of demand that is still seen as fragile.

From a structural perspective, Shell released its Energy Security Scenarios 2026 report on Thursday, outlining a bullish long-term outlook for global energy demand. According to the report, primary energy needs could be significantly higher by 2050, supporting Oil growth over the long run, Reuters reported. This long-term view, however, contrasts with short-term sentiment dominated by oversupply dynamics.

In addition, Reuters reported that the United States seized another Venezuela-linked Oil tanker in the Caribbean, bringing the total number of vessels targeted under US sanctions on Venezuelan Oil to six. The move came ahead of a scheduled meeting between Donald Trump and opposition leader María Corina Machado, highlighting Washington’s continued enforcement of sanctions, although the immediate impact on global supply remains limited.

Overall, the current rebound in WTI US Oil mainly reflects temporary relief on the geopolitical front, while concerns over global supply and demand conditions continue to restrain the prospects for a more sustained upside move.