After multiple deadlines and threats of fresh attacks, traders don't seem to believe that further escalation is a genuine risk.
Oil prices may stay volatile as diplomacy cools the war-risk premium, while the closed Strait of Hormuz and tight inventories continue to support the broader bullish trend.
Oil fell after Trump delayed a planned strike on Iran. Gulf leaders had urged Washington to hold off military action.
Oil fell in early trade amid easing supply-disruption concerns.
Oil futures climbed on Monday, getting a boost after President Donald Trump warned that the “clock is ticking” on Iran, but a loss of the buffers used to cushion supply disruptions could spark the next significant move higher for prices.
Evercore's Roger Altman said in a CNBC interview on Monday that a sharp rise in crude could destabilize markets before it may trigger “the second big inflation shock of this decade after COVID,” especially if oil prices climb toward $150 a barrel or higher.
I think most energy analysts would have been shocked to learn that roughly three months into a total closure of the Strait of Hormuz, oil would be trading at just over $100 a barrel. I certainly expected prices to be significantly higher by now.
Oil markets are operating under a "veneer of stability", strategists say, but physical shortages could strike Europe by the end of this month. Even a swift reopening of the Strait of Hormuz would still mean delays and stress as complex supply chains unlock.
President Donald Trump said Iran better get moving fast.
Crude oil futures eye a breakout as Iran risks grow, Hormuz stays restricted, and falling inventories tighten global oil supplies.
China's April crude oil throughput fell to the lowest since August 2022, official data showed on Monday, as the Iran war curbed refinery runs in the world's second-largest oil consumer.
Trump said in a Truth Social post Sunday that "For Iran, the Clock is Ticking" International Energy Agency has warned that oil inventories globally were depleting at a record pace.