BY COMFORT OGBONNA
Oil prices moved sharply on Tuesday as traders assessed conflicting signals surrounding the conflict involving Iran and the potential for U.S. policy shifts, while supply concerns tied to the continued closure of the Strait of Hormuz kept markets on edge.
Global benchmark Brent crude for May delivery rose 65 cents, or about 0.58%, to $113.43 per barrel by 0655 GMT. The trading session has been marked by strong volatility, with prices fluctuating between gains of roughly 2% and losses of about 1%. The May contract is due to expire Tuesday, while the more actively traded June contract was priced around $107.31.
Meanwhile, West Texas Intermediate (WTI) crude futures for May edged up slightly by 2 cents to $102.90 per barrel. Earlier in the session, the U.S. benchmark reversed initial losses and briefly climbed to its highest level since March 9.
Market participants say the volatility reflects growing uncertainty about whether geopolitical tensions could ease soon or whether the global oil market will continue facing supply disruptions.
Mixed Signals From Washington
Part of the market’s early reaction came after a report from The Wall Street Journal indicated that Donald Trump is willing to halt the U.S. military campaign against Iran even if the key shipping lane at the Strait of Hormuz remains largely closed for the time being.
The report, citing administration officials, suggested that reopening the vital maritime route could be addressed later rather than being an immediate condition for ending hostilities.
However, analysts noted that even if military operations were halted, oil prices would likely remain elevated until shipping through the strait fully resumes. The narrow waterway is one of the most critical chokepoints in the global energy trade, carrying roughly one-fifth of the world’s oil supply as well as large volumes of liquefied natural gas.
Earlier in the conflict, President Trump warned that the United States could “obliterate” Iran’s energy infrastructure—including oil wells and power plants—if Tehran did not restore access to the waterway.
The disruption to shipping through the Strait of Hormuz has triggered one of the strongest oil rallies in years.
Since the start of March, Brent crude futures have surged about 59%, marking a record monthly gain. WTI prices have climbed roughly 58% during the same period, the largest increase since May 2020.
On a quarterly basis, the gains have been even more dramatic, with Brent crude rising around 86% and WTI increasing approximately 79%.
Sugandha Sachdeva, founder of New Delhi–based research firm SS WealthStreet, said the uncertainty surrounding the conflict is likely to keep markets volatile.
“While diplomatic signals remain mixed, the ground reality suggests that uncertainty will persist,” Sachdeva said.
She added that even if tensions begin to ease, restoring damaged infrastructure and stabilizing supply chains would take time, keeping the oil market tight.
“Even in the event of de-escalation, restoring damaged infrastructure will take time, keeping supply tight,” she noted.
Concerns about global energy supply intensified Tuesday after Kuwait Petroleum Corporation reported that its crude oil tanker Al Salmi was struck in what officials described as a suspected Iranian attack while docked at a port in Dubai.
The vessel, which can carry up to two million barrels of crude oil, was fully loaded at the time of the incident. Authorities also warned that the strike could lead to oil spills in the surrounding waters, potentially complicating shipping operations in the region.
Meanwhile, Iran-aligned Houthi forces in Yemen launched missile strikes toward Israel over the weekend. The attacks have raised new fears about disruptions at another vital shipping route—the Bab el-Mandeb Strait—which links the Red Sea to the Gulf of Aden and serves as a key passage for vessels traveling between Asia and Europe via the Suez Canal.
Saudi Arabia Redirects Oil Exports
Amid the uncertainty, Saudi Arabia has begun rerouting some of its crude exports away from the Persian Gulf to alternative shipping routes.
According to data from Kpler, Saudi shipments through the Red Sea have surged in recent weeks. Around 4.658 million barrels per day of crude are now being sent to the Red Sea port of Yanbu—a sharp increase compared with the average of roughly 770,000 barrels per day during January and February.
This shift highlights how major oil producers are attempting to maintain supply flows while navigating heightened geopolitical risks across key maritime corridors.
Market Warns of Potential Oil Shortages
Energy analysts say the global oil market could face deeper supply constraints if the Strait of Hormuz remains closed for an extended period.
Lin Ye, vice president for commodities markets and oil at Rystad Energy, warned that the market’s remaining supply buffers are gradually shrinking.
“With the oil market’s remaining buffers gradually being consumed, the market’s vulnerability to a prolonged closure of Hormuz means that we are moving closer to physical oil shortages across a wider geographic scope,” Ye said.
He added that continued supply disruptions could strengthen upward momentum in oil prices in the coming weeks.
Falling U.S. Inventories Add to Pressure
Supply concerns have also been reinforced by expectations of declining fuel inventories in the United States.
A preliminary industry poll conducted Monday indicated that U.S. crude oil stockpiles likely fell last week. The survey also pointed to declines in distillate and gasoline inventories, signaling strong demand and tightening supply conditions.
If confirmed by official data later this week, falling inventories in the world’s largest oil-consuming nation could add further upward pressure to already elevated global oil prices.
Original article
Comments