Commodities

Oil extends gains on lingering US-Iran tensions and supply risks

Nikos Tzabouras Written by Nikos Tzabouras

USOIL Analysis

Supply disruption risks linger despite fresh Washington-Tehran negotiations, amid a military buildup in the Middle East. The United States has dispatched another carrier in the region [1], while Iran conducted drills at the Strait of Hormuz [2]. This is a crucial transit corridor accounting for 20% of the world's petroleum liquids consumption, according to the US Energy Information Administration (IEA) [3]. Meanwhile, Vice President JD Vance pointed to differences between the two sides, speaking of red lines that Iranians "are not yet willing to actually acknowledge and work through" [4], keeping the geopolitical risk premium elevated.

The consumption outlook could brighten as the global economy normalises from last year's tariff shocks, amid a Sino-US trade détente and a deal with India that induces fresh optimism. Furthermore, the latest strong US jobs report and cooling inflation reduce macro uncertainty in the world's top producer and strengthen expectations for multiple Federal Reserve rate cuts to support growth.

With the geopolitical risk premium staying elevated, USOil rises and can extend its gains to new 2026 highs. However, the Relative Strength Index (RSI) moves towards overbought territory, while fundamentals remain stacked against a more meaningful recovery and WTI remains vulnerable to sub-EA200 moves that would reinstate the bearish outlook.

Vice President Vance acknowledged that the negotiations "in some ways went well" and Iranian Foreign Minister Abbas Araghchi spoke of progress [5], while US President Donald Trump recently expressed a preference for a diplomatic solution [6]. These comments alongside further talks could lower the geopolitical temperature and ease flow disruption risks.

This would shift focus back to oil glut prospects, with the International Energy Agency lowering its 2026 demand growth outlook [7]. On the supply side, markets are anticipating additional OPEC+ hikes after the Q1 pause, while the US has started rolling back sanctions on Venezuela crude and US Energy Secretary Chris Wright spoke of "several hundred thousand barrels" of additional output by the end of this year. [8]

Nikos Tzabouras

Senior Financial Editorial Writer

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. With extensive experience in market analysis and a strong foundation in international relations, he brings a unique perspective to financial markets. Nikos emphasizes not only technical analysis but also on fundamentals and the growing influence of geopolitics on financial trends.

As a Senior Financial Editorial Writer, he delivers comprehensive and forward-looking insights across a wide range of asset classes, including equities, commodities, and currencies. His work explores how macroeconomic events, political developments, and global policies impact market dynamics, providing readers with a deeper understanding of both short-term movements and long-term trends.

References

1

Retrieved 19 Feb 2026 https://www.youtube.com/watch

2

Retrieved 19 Feb 2026 https://en.irna.ir/news/86079706/IRGC-Navy-holds-Smart-Control-of-the-Strait-of-Hormuz-drills

3

Retrieved 19 Feb 2026 https://www.eia.gov/todayinenergy/detail.php

4

Retrieved 19 Feb 2026 https://www.youtube.com/watch

5

Retrieved 19 Feb 2026 https://en.irna.ir/news/86080896/Araghchi-Good-progress-made-in-indirect-talks-with-US

6

Retrieved 19 Feb 2026 https://www.youtube.com/watch

7

Retrieved 19 Feb 2026 https://www.iea.org/reports/oil-market-report-february-2026

8

Retrieved 01 May 2026 https://www.youtube.com/watch

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