After a 10% plunge, a rebound: Weekend crude oil market review

Friday’s reopening of the Strait of Hormuz has sparked a widespread risk appetite in the market: U.S. stocks soared, oil prices plummeted, U.S. Treasury yields declined, and the market believes the worst is over, with global energy supply disruptions easing.

However, these measures may prove to be premature.

At 9:20 a.m. on the 18th (Saturday), reports of two oil tankers being denied passage through the Strait of Hormuz first broke the calm. Trump immediately publicly pressured: if an agreement is not reached by Wednesday, the U.S. will continue to blockade Iranian ports. At 4 p.m. that day, Iran announced the re-imposition of restrictions on the strait and opened fire on ships attempting to pass—two Indian ships turned back to the Persian Gulf after being shelled, and shipping through the strait nearly came to a halt.

Traders responded quickly on TradeXYZ, with crude oil contracts rising about 4.52% compared to the weekend closing price, while S&P index contracts fell nearly 0.8%.

Trump then shifted stance, revealing that special envoy Steve Witkoff would travel to Pakistan on Tuesday for talks with Iran, with negotiations possibly extended to Wednesday.

Trump also posted on Truth Social, stating, “The agreement we offer is very fair and reasonable. I hope they accept it because if they don’t, the U.S. will destroy every power plant and bridge in Iran.”

Iran clearly does not buy this. At 1:53 a.m. on the 20th, Iran announced it would refuse to participate in the second round of talks; according to Axios, Tehran’s judgment is that the U.S. might launch an attack before the ceasefire period ends on Tuesday night.

As a result of this news, oil prices surged again, erasing the high point of the 18th, while the S&P index fell below its low of the 18th.

In terms of individual stocks, three crypto-related stocks significantly lagged behind others.

It is foreseeable that the optimistic market sentiment that spread last week will be punished. The market trend this week will largely depend on whether Iran can maintain its non-negotiation stance.

Source: weekendmarkets.xyz

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