The Saudi defence ministry said on Monday it had thwarted a drone attack targeting an oil field in the kingdom’s east, near the Emirati border.
“It has been an incredibly wild ride for traders and investors to navigate the price action put to them over the past 24 hours, with breathtaking reversals taking place across many parts of the financial markets,” said Chris Weston, an analyst at Pepperstone.
“The pressure valve has clearly been released for now. However, volatility across energy markets remains exceptionally elevated.
“While the most extreme stress has eased, markets are still pricing a significant degree of uncertainty and risk.
“The geopolitical backdrop remains fluid, and traders should expect volatility to remain a defining feature of the trading environment in the days ahead.”
Oil analyst Paul Sankey told CNA’s Asia First that he was “surprised” by market optimism following Trump’s comments.
“In fact, it tends to be the loser that gets to choose when the war ends, and we’re just not sure that Iran is done with this Strait of Hormuz situation,” noted the president of Sankey Research.
Even if the Strait completely reopens the next day, there will still be “disarray” for another month at the least, he added.
“Restarting these facilities is difficult, and we’ve seen countries shutting (off) oil production and gas production again. You can’t just turn that stuff straight back on. It takes time to recover it, and every day that passes, the situation continues to deteriorate,” warned Sankey.
Easing sanctions on Russia, meanwhile, will be a “short-term band aid” that will not go a long way to solving the problem, he added.
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