Oil Prices Rise Amid Ongoing US-Iran War Standoff
Crude futures climb nearly 2% as tensions persist in the Middle East
Oil prices surged by nearly 2 percent on Tuesday, extending gains from the previous session, amid ongoing tensions between the United States and Iran.
The conflict appears to be stalled, with the crucial Strait of Hormuz largely closed, disrupting energy supplies from key Middle Eastern producing regions.
US President Donald Trump expressed dissatisfaction with Iran's latest proposal aimed at ending the war.
According to a US official, Trump is unhappy with the offer, leaving the conflict deadlocked.
In response, Iran has shut down shipping flows through the Strait of Hormuz, which typically carries around 20 percent of global oil and gas consumption.
The US continues to maintain its blockade on Iranian ports.
Brent crude futures for June rose by $2.32, or 2.1 percent, reaching $110.55 a barrel at 09:38 a.m. Saudi time.
This follows a 2.8 percent gain in the previous session, marking the highest close since April 7.
Similarly, US West Texas Intermediate crude for June increased by $1.80, or 1.9 percent, to $98.17 a barrel, after gaining 2.1 percent in the previous session.
Previous negotiations between the US and Iran collapsed last week due to failed face-to-face talks.
Market analysts suggest that despite diplomatic rhetoric, there is little evidence of de-escalation.
Vessel movement through the Strait of Hormuz remains curtailed, contributing to elevated oil risk premiums.
Ship-tracking data reveals significant disruptions in the region, with six Iranian oil tankers forced to turn back due to the US blockade.
However, a liquefied natural gas tanker managed by Abu Dhabi National Oil Co. successfully crossed the Strait of Hormuz and appears to be en route to India, according to ship-tracking data from Monday.
Prior to the escalation of hostilities between the US and Iran on February 28th, approximately 125-140 vessels transited through the strait daily.
Experts anticipate that current oil prices may become the new norm, with DBS Bank's energy sector team leader, Suvro Sarkar, suggesting a prolonged ceasefire 'limbo situation' where oil prices could trade between $100 and $125 per barrel.
With no immediate resolution in sight and an indefinite ceasefire providing uncertainty over the status of the Strait, oil prices are expected to trend higher as physical markets adjust to the current situation.
Over time, the conflict may become 'normalized' in financial markets, leading to reduced volatility but a higher baseline.
The conflict appears to be stalled, with the crucial Strait of Hormuz largely closed, disrupting energy supplies from key Middle Eastern producing regions.
US President Donald Trump expressed dissatisfaction with Iran's latest proposal aimed at ending the war.
According to a US official, Trump is unhappy with the offer, leaving the conflict deadlocked.
In response, Iran has shut down shipping flows through the Strait of Hormuz, which typically carries around 20 percent of global oil and gas consumption.
The US continues to maintain its blockade on Iranian ports.
Brent crude futures for June rose by $2.32, or 2.1 percent, reaching $110.55 a barrel at 09:38 a.m. Saudi time.
This follows a 2.8 percent gain in the previous session, marking the highest close since April 7.
Similarly, US West Texas Intermediate crude for June increased by $1.80, or 1.9 percent, to $98.17 a barrel, after gaining 2.1 percent in the previous session.
Previous negotiations between the US and Iran collapsed last week due to failed face-to-face talks.
Market analysts suggest that despite diplomatic rhetoric, there is little evidence of de-escalation.
Vessel movement through the Strait of Hormuz remains curtailed, contributing to elevated oil risk premiums.
Ship-tracking data reveals significant disruptions in the region, with six Iranian oil tankers forced to turn back due to the US blockade.
However, a liquefied natural gas tanker managed by Abu Dhabi National Oil Co. successfully crossed the Strait of Hormuz and appears to be en route to India, according to ship-tracking data from Monday.
Prior to the escalation of hostilities between the US and Iran on February 28th, approximately 125-140 vessels transited through the strait daily.
Experts anticipate that current oil prices may become the new norm, with DBS Bank's energy sector team leader, Suvro Sarkar, suggesting a prolonged ceasefire 'limbo situation' where oil prices could trade between $100 and $125 per barrel.
With no immediate resolution in sight and an indefinite ceasefire providing uncertainty over the status of the Strait, oil prices are expected to trend higher as physical markets adjust to the current situation.
Over time, the conflict may become 'normalized' in financial markets, leading to reduced volatility but a higher baseline.
