Recent developments in US-Iran negotiations have led to a cautious optimism regarding a potential ceasefire. Reports indicate that negotiators from both countries have reached a tentative agreement to extend a ceasefire and engage in further discussions about Iran's nuclear program. This has sparked speculation about the future of oil supply and pricing, particularly as the conflict has significantly disrupted shipping routes in the region.

Despite the optimism surrounding the ceasefire, analysts caution that any recovery in oil supply will take time. The Strait of Hormuz, a critical passage for global oil shipments, remains largely closed, which continues to exert upward pressure on prices. As a result, while some analysts predict a potential rise in Brent crude prices to $120 a barrel, the market remains sensitive to geopolitical developments. Analysts warned that any potential ceasefire extension should be viewed cautiously, as oil supply recovery will take time.

In response to the shifting dynamics of US-Iran relations, oil prices have experienced fluctuations. Recently, US West Texas Intermediate futures rose to $107.69 per barrel, reflecting investor sentiment as they weighed President Trump's statements regarding Iran. The market's reaction underscores the delicate balance between geopolitical tensions and economic forecasts.

As the situation evolves, analysts at Citi have expressed expectations that Brent crude could rise significantly, citing that current prices may not fully account for the risks associated with prolonged supply disruptions. This sentiment is echoed by PVM analysts, who have noted that global oil stocks could reach critically low levels if the conflict continues without resolution. Analysts at Citi said on Tuesday that they expect Brent crude to rise to $120 a barrel in the near term, stating that oil markets were underpricing the risk of prolonged supply disruption.

The ongoing conflict and the uncertainty surrounding US-Iran negotiations have raised significant concerns about global oil supply. With the Strait of Hormuz being a vital artery for oil transport, the closure has led to fears of a supply crunch. As a result, oil prices have remained above pre-war levels, even as they dip amid hopes for a ceasefire.

Market analysts are closely monitoring the situation, as any resolution could lead to a reopening of shipping routes and a potential stabilization of oil prices. However, the current geopolitical climate suggests that volatility may persist, keeping traders on edge as they navigate the complexities of the oil market. Oil prices slipped on this de-escalation optimism, yet stayed above pre-war levels as the Strait of Hormuz largely remains closed.