Deutsche Bank’s analysts highlight sharp Brent Oil volatility as Iran tensions and Strait of Hormuz disruptions drive price swings. They note Brent crude rebounded after a steep Friday selloff, but remains sensitive to ceasefire headlines and shipping probabilities. They stress that recent optimism on conflict resolution and energy prices may prove fragile.

Oil swings on Strait of Hormuz risk

"Recapping last week now, and markets climbed higher as prospects for a resolution between Iran and the US became more likely over the week. That was further cemented on Friday after Iran’s Foreign Minister announced that the Strait of Hormuz would now be open for the remaining period of the ceasefire."

"Although that was reversed less than a day later on Saturday, this helped drive Brent crude down -5.06% (-9.07% on Friday) last week to $90.38/bbl, its lowest close since March 10."

"The headline news over the weekend was Iran stating that the Strait of Hormuz was shut less than 24 hours after indicating on Friday that it would reopen. Shipping through the strait has now again ground to a halt after picking up on Saturday."

"On Friday afternoon in London, Polymarket had priced the probability of Strait traffic returning to normal by the end of May as high as 84%. That has now fallen back to around 63%, close to last Thursday’s level, but still well above the 37% probability priced this time last week."

"This backdrop has meant that markets this morning have reversed a good chunk of Friday’s moves. Brent crude is up +5.61% to $95.45/bbl after a -9.07% decline on Friday, leaving it at levels seen around the middle of last week."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)