Oil futures dipped in early Asian trading on Monday after a sharp rally in WTI and Brent. The decline appears to mark a short‑term technical pullback, rather than a fundamental shift. Investors look to geopolitical tensions for further clues amid growing uncertainty over the Strait of Hormuz and the possibility of renewed sanctions.

WTI front‑month contracts fell 1.6% to $104.76 a barrel, while Brent slid 0.7% to $113.62. The drop followed a record rally that lifted both benchmarks to the highest levels seen since late 2024. Traders now weigh the durability of the rebound against potential supply disruptions in the volatile Gulf region and the looming U.S. sanctions.

Analysts point to the U.S.‑Iran cease‑fire, which has recently frayed as Iranian forces launched cruise missiles and drones against U.S.‑flagged ships in the Strait of Hormuz. U.S. naval escorts have begun guiding merchant vessels, but the escalation raises doubts that the market can sustain the recent gains without a fresh diplomatic reset shortly ahead now.

The pullback signals that oil prices remain vulnerable to geopolitical jitters. With the Gulf region's shipping lanes under renewed threat, investors face a risk‑reward balance that hinges on diplomatic developments and U.S. military presence. Until clarity emerges, traders will likely keep oil on a tight, cautious trading band for the next few sessions and watch.