Oil: Fragile ceasefire keeps supply risks elevated – Wells Fargo

FXStreet Insights Team FXStreet

Wells Fargo’s international economics team notes that a fragile ceasefire in the Middle East leaves Oil market risks elevated and conviction on the outlook low. They still assume active conflict ends by mid‑2026 and expect Oil to trend lower into H2 2026, but emphasize that large potential supply shut‑ins and slow normalization could keep prices and volatility higher than markets imply.

Ceasefire fails to resolve Oil risks

"The announced ceasefire looks fragile and keeps Middle East risk elevated."

"We still assume active conflict ends by mid‑year and oil trends lower into H2 2026, but conviction on the outlook remains low amid persistent geopolitical stress."

"This is a large and worsening supply shock."

"The IEA estimates potential oil supply shut‑ins near 10 mbpd, roughly 10% of global supply, with conditions deteriorating further through April."

"Ceasefire does not mean normalization. Shipping through Hormuz and energy production will recover slowly, if at all, without durable peace."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

EUR/USD retreats toward 1.1500 despite ECB rate hike

EUR/USD stays under bearish pressure and declines toward 1.1500 in the American session on Thursday. Although the European Central Bank raised key rates by 25 bps after the June meeting, the pair struggles to hold its ground as US President Donald Trump's renewed threat to hit Iran weighs on sentiment and supports the US Dollar.

GBP/USD extends slide below 1.3350 on renewed USD demand

GBP/USD is falling below the 1.3350 level in the American session on Thursday. Increased hawkish Fed bets and looming Mideast geopolitical risks sponsor the latest leg up in the US Dollar, particularly after the Producer Price Index jumped to 6.5% YoY in May.

Gold challenges fresh 2025 lows below $4,100

Gold struggles to stage a rebound and trades below $4,100 in the American session on Thursday. Mixed producer inflation data from the US and a further escalation of tensions in the Middle East don't allow the precious metal to shake off the bearish pressure.

Crypto Today: Bitcoin, Ethereum, XRP rebound broadens despite continued US-Iran strikes

Bitcoin steadies its recovery on Thursday, edging higher toward $63,000 despite incessant capital outflows. Meanwhile, altcoins, including Ethereum and Ripple, exhibit subtle rebound signs, trading above $1,650 and $1.12, respectively.

Indonesia surprise rate hike may not be enough to save the Rupiah

The surprise rate hike from Bank Indonesia, aimed at protecting the Indonesian Rupiah from sliding further, seems to have worked for now. The rate increase definitely helps, but there’s more work to do if Jakarta wants to ease investors’ concerns for good.

4.2% headline, 0.2% core: Why the Fed's next hike may be targeting the wrong problem

May's CPI put headline inflation at 4.2% on the year, up from 3.8% in April and the hottest reading since April 2023, while core prices rose just 0.2% on the month, undershooting the 0.3% consensus and halving April's pace.