Rabobank strategist Molly Schwartz notes that crude Oil’s initial sharp drop on the Iran ceasefire headlines has been only partially reversed, despite renewed tensions and the Strait of Hormuz re-closing. She highlights that a temporarily lower crude level around $94–96/bbl could cushion future price spikes if hostilities resume, suggesting markets may be factoring in a tactical US strategy.

Crude reacts modestly to Hormuz closure

"Global macro markets were a little more sensitive to (war) hawkish headlines"

"But the market that (surprisingly) barely moved yesterday was crude oil. Crude one month futures fell more than $16 to $94/bbl after the news of a ceasefire first broke, but the Strait reclosing and the fragility of the ceasefire exposed resulted in minimal price action, with crude closing at around $96/bbl."

"A ceasefire announcement that is well-received by the market could soothe markets and inflationary expectations, as well as depress the price of oil—which it has done for the time being. Should the Trump Administration choose to ramp up offensive measures in two weeks (or even today), it’s possible that the jump in prices may be somewhat mitigated, as we’re bouncing off of a “suppressed” crude level of $94/bbl, as opposed to the $110/bbl level we were at earlier in the week."

"While the moving parts here are extremely complex and there is likely much more at play here than just “because markets,” the markets angle is still something to think about."

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