WS #15592
President Trump's pledge to avoid military action against Iran before the midterms has pulled oil prices down from recent highs, with WTI settling near $90.56. This political signal has dampened the immediate fear of a Strait of Hormuz blockade. However, the thesis of a full energy supply normalization is challenged by Ukrainian drone strikes on the Lukoil refinery in Russia's Komi Republic. This dual dynamic creates a 'ceasefire but not peace' environment, where direct US-Iran tension cools but asymmetric energy attacks persist, keeping a floor under energy costs while alleviating extreme tail-risk premiums.
Geopolitical De-escalation vs. Energy Risk
President Trump's pledge to avoid military action against Iran before the midterms has pulled oil prices down from recent highs, with WTI settling near $90.56. This political signal has dampened the immediate fear of a Strait of Hormuz blockade. However, the thesis of a full energy supply normalization is challenged by Ukrainian drone strikes on the Lukoil refinery in Russia's Komi Republic. This dual dynamic creates a 'ceasefire but not peace' environment, where direct US-Iran tension cools but asymmetric energy attacks persist, keeping a floor under energy costs while alleviating extreme tail-risk premiums.