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Oil Markets Locked in a Tug-of-War Cycle
A classic “tug-of-war” (or “push-and-pull”) dynamic has been unfolding recently in crude oil: three days of ceasefire, three days of escalation, three days of calm — and then the cycle repeats. As a result, prices have held firmly above $95, with only a brief spike dipping below that level. The market is not exhibiting a clear trend; rather, it is operating in a constant state of risk repricing, where each headline rapidly alters the balance between supply and demand.
The fact that prices remain above key levels suggests that a risk premium is still embedded. Even during periods of de-escalation, participants appear reluctant to sell aggressively, as the probability of renewed supply disruptions remains elevated — particularly given the sensitivity of key chokepoints such as the Strait of Hormuz. Consequently, downward moves are generally viewed as temporary rather than indicative of a sustained decline.
Should the ceasefire be extended and prove durable, the market would likely begin to unwind this risk premium gradually, potentially shifting oil into a lower range of $85–92. However, such a move would probably be uneven rather than linear, with each decline tested by fresh developments. The question of lifting the blockade remains pivotal. It is unlikely to be maintained until inventories fall to critical levels (for instance, 2–3 weeks of supply in Asia), as this would risk a sharp price spike towards $130–150. More plausibly, the blockade would be lifted earlier — at a point where pressure on the physical market becomes pronounced, yet still manageable.
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