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Oil prices continue to be the tail that is wagging the dog

It’s another day but it will be the same old story in markets as it has been since last week. Every inch of the broader market mood is fixated on the Middle East as the energy disruption continues to drag on. Despite whatever safety assurance or what Trump says about the war being won, the fact remains that the Strait of Hormuz remains in de facto closure.And unless that changes, oil prices will stay underpinned and even more so the longer the status quo extends. In turn, that will continue to have an impact on broader market sentiment. Be it from major currencies, to stocks, to bonds, to precious metals. It’s all connected at the moment with their respective fates tied to the movement in oil prices.US president Trump may claim that Iran has been defeated, or at least incapacitated, and that victory draws near. However, the fact remains that no commercial vessel is able to transit safely through the Strait of Hormuz still. That as Iran somehow continues to maintain its presence around that part of the region in striking down anything and everything that moves there.As things stand, the speculation is that the only ones brave enough to transit are “shadow fleets” with ties to Iran or certain sanctioned entities. These will be ones operating with AIS transponders turned off and are “safe” due to carrying Iranian cargo.Besides that, there is almost no actual vessels willing to take the risk to cross the strait currently. Kpler data has signaled that transit across the strait is basically non-existent now. Meanwhile, AIS data might show ships crossing but that number is relatively low (1-2 per day) and even then those vessels are likely ones with ties to Iran.If you’re an independent vessel, it makes no sense to risk the situation. And that is where we are at now.In essence, actions speak louder than words. It’s always the case with any war. And until the energy disruption situation improves, the danger is that oil prices will slowly return back to the highs in the days/weeks ahead. Just be reminded that with each passing day, the risk of that grows even greater.
This article was written by Justin Low at investinglive.com.

🔗 Source

💡 DMK Insight

The ongoing turmoil in the Middle East is keeping traders on edge, and here’s why that matters right now: energy prices are likely to remain volatile, impacting not just oil but also broader market sentiment. With geopolitical tensions escalating, traders should be wary of how this could affect supply chains and inflation rates, which are already sensitive post-pandemic. If energy prices spike further, we could see a ripple effect across commodities and even equities, particularly in sectors reliant on stable energy costs. Watch for key levels in crude oil; a break above recent highs could trigger further bullish sentiment, while a pullback might signal profit-taking. Keep an eye on the daily charts for signs of consolidation or breakout patterns. On the flip side, if the situation stabilizes, we might see a swift correction in energy prices, leading to a potential buying opportunity in oversold sectors. So, traders should monitor news closely and be prepared for rapid shifts in sentiment based on developments in the region.

📮 Takeaway

Watch for crude oil price movements; a breakout could signal further volatility in related markets, while stabilization might present buying opportunities.

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