Oil prices opened sharply higher on Monday after US President Donald Trump said he had rejected Tehran's response to Washington's peace proposal, signaling renewed geopolitical risk in the region. Traders pointed to risk premia tied to potential disruptions of Middle East supply, the fragility of diplomacy between Washington and Tehran, and ongoing sanctions dynamics as key drivers behind the move. The rally illustrates how energy markets quickly translate geopolitical headlines into price action, with investors seeking hedges against supply shocks and heightened uncertainty. In the near term, prices may remain sensitive to new statements from U.S. officials, Iranian authorities, and other regional players, as well as any tangible steps toward de-escalation or renewed talks. Beyond immediate headlines, the market is balancing broader factors such as OPEC+ production adjustments, currency fluctuations, and global growth expectations, all of which can amplify or dampen risk premia. If diplomacy stalls, prices could stay buoyant on fear of disruption; if signs of progress materialize, gains might ease as risk sentiment stabilizes. In my view, this episode underscores how geopolitics continues to be a primary driver of energy prices, often outweighing fundamentals like supply and demand. While monitoring diplomatic developments is prudent, long-term price stability will hinge on de-escalation, transparent communication, and resilient energy supply chains that reduce volatility for consumers and businesses alike.
Source: Statement from @PakTVGlobal
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Published: May 10, 2026, 7:12 pm
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