Key Takeaways:

* Oil prices rebound after sharp selloff as ceasefire uncertainty rises

* Iran questions legitimacy of ceasefire terms, citing violations

* Strait of Hormuz remains largely constrained, keeping supply risks elevated

* U.S. to begin direct talks with Iran amid ongoing regional tensions

Market Summary:

Oil prices rebounded after recording their steepest one-day decline since April 2020, as concerns grew over the stability of the recently agreed ceasefire in the Middle East.

On the first day of the truce, Mohammad Bagher Ghalibaf cast doubt on the viability of negotiations with the United States, stating that a ceasefire agreement was “unreasonable” and accusing Washington of failing to meet several of Tehran’s conditions for ending the conflict. His remarks underscored the fragile nature of the agreement, despite both the United States and Iran publicly claiming success following the two-week ceasefire arrangement.

Tensions on the ground remained elevated, with continued drone and missile activity reported across the region, including strikes affecting parts of the Islamic Republic and neighboring Gulf states. At the same time, Israeli military actions in Lebanon have added another layer of uncertainty, raising the risk that the ceasefire could quickly unravel.

The Strait of Hormuz remains a central concern for energy markets, with shipping activity still significantly constrained. As a key route for global oil supply, any prolonged disruption continues to support prices despite the initial ceasefire announcement.

In a parallel development, the White House confirmed that the United States will proceed with direct negotiations with Iran. Press Secretary Karoline Leavitt stated that JD Vance will lead the U.S. delegation to Islamabad, alongside envoys Steve Witkoff and Jared Kushner. The first round of talks is expected to take place on Saturday, marking a critical step toward potential de-escalation.

Despite diplomatic progress, markets remain cautious as ongoing hostilities and conflicting narratives continue to cloud the outlook. Oil prices are likely to remain volatile in the near term, with traders closely monitoring both military developments and the progress of negotiations for clearer direction.