Rabobank’s Senior Macro Strategist Bas van Geffen notes that Oil remains directionless as the Gulf conflict oscillates between negotiation and potential escalation. He highlights that a lack of clear resolution could send Oil prices sharply higher or lower, while a grinding stalemate would still be negative for global energy stocks and broader economic outlooks, according to the bank.

Energy markets caught between war and talks

"So, a darker scenario of a return to bombing campaigns may be averted – for now. And lack of escalation or resolution of the conflict means that financial markets continue to wait for new direction – sending oil prices sharply higher or lower, depending on whether the outlook improves or suddenly deteriorates."

"Meanwhile, the US Treasury has extended the sanctions waiver on Russian crude until June 17, after the previous waiver expired a few days ago – to contain price spikes where possible."

"However, as we noted yesterday, a grinding stalemate would be bad enough for global energy stocks, and economic outlooks."

"The International Energy Agency warned that stockpiles are “depleting very fast.”"

"Higher prices may incentivise redirection of supplies to areas that can afford them, but those countries that cannot are starting to face supply constraints."

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