Today’s market analysis on behalf of Dilin Wu Research Strategist at Pepperstone 4o4r2u
18th March 2025
The escalation of Red Sea tensions over the weekend was a key driver behind oil’s gap higher at Monday’s open. With major producers like Saudi Arabia and Iran bordering the region, vessel attacks could raise transportation costs and amplify supply risks—factors that objectively higher crude prices.
On the supply side, Trump’s latest move to tighten sanctions on Iranian and Venezuelan oil exports is constraining output, adding another layer of upward pressure on prices.
That said, I don’t see a sustained rally just yet. Until crude clears $70 per barrel, the market is likely to remain in a holding pattern. Lingering uncertainty over U.S. trade policy and mounting concerns about the economic outlook are capping risk appetite, limiting oil’s upside. At the same time, with global growth slowing and trade tensions dampening demand, the fundamental picture hasn’t turned decisively bullish. In the medium term, rising U.S. production and weaker-than-expected global demand create a supply-demand imbalance that makes a prolonged oil rally difficult to sustain.
One key risk to watch: If the U.S.-Ukraine resource development deal progresses and markets further price in the potential return of Russian oil, that could weigh on prices in the near term.