Oil prices dipping back below the $100 mark may suggest easing geopolitical tensions, but underlying supply dynamics indicate that upward pressure on prices could persist, according to eToro’s latest market commentary.
A significant portion of Persian Gulf oil supply remains disrupted, with inventory drawdowns and softer demand temporarily absorbing the shock. However, as the last pre-blockade cargoes clear the system in the coming days, this buffer is expected to diminish, potentially exposing tighter market conditions.
Signs of tightening are already visible in the physical oil market, where crude is trading at a premium to futures, reflecting near-term supply constraints and immediate demand for available barrels.
Lale Akoner, Global Market Analyst at eToro, commented: “Oil’s move back below $100 may suggest easing tensions, but we think that the underlying supply dynamic still signals that oil could continue to rise.”
She added: “A meaningful share of Persian Gulf supply is already missing from the market, with inventory drawdowns and softer demand absorbing the shock. As the last pre-blockade cargoes clear the system, the market loses its cushion, and the adjustment that follows is likely to be more visible.”
While prices are currently supported by expectations of diplomatic progress, market fundamentals may soon take precedence. A sharper slowdown in refinery activity or a further decline in inventories toward critical levels could accelerate price movements.
Akoner concluded: “For now, prices are anchored by expectations that diplomacy will progress. Our view is that fundamentals will reassert themselves. If supply constraints persist, oil is more likely to move higher from here than lower.”
