By Zaheer Anwari, Co-Founder and CEO at The Revacy Fund
Oil dropped sharply on Wednesday, falling back below USD 100 per barrel as traders priced out some of the recent geopolitical risk. The announcement of a temporary ceasefire framework, along with signs of a possible negotiation path between the United States and Iran, was enough to shift sentiment and pull oil lower.
The prospect of the Strait of Hormuz reopening has also eased some of the immediate pressure, particularly as early tanker movements point to the possibility of transit resuming through the chokepoint. That said, the market is unlikely to assume a full return to normal conditions too quickly. Any improvement in global energy flows could still be slow, uneven, and vulnerable to disruption, which may help stop oil from falling too far, too fast.
Looking ahead, the oil market is likely to remain highly sensitive to whether this ceasefire holds and whether supply routes genuinely reopen in a meaningful way. If flows continue to stabilise and diplomacy gains traction, further downside is possible. But if the ceasefire weakens or tensions flare up again, the risk premium can return very quickly and push volatility straight back into the market.
From a portfolio perspective, we remain flat on oil, as these swings in price were always a likely feature of a market driven by uncertainty and prone to whipsawing traders in and out of positions. We will remain on the sidelines until a clearer long-term direction is confirmed. For now, our focus remains on areas where bullish momentum is beginning to reappear more constructively, particularly in stocks and metal.
