BY COMOFORT OGBONNA
Oil prices moved slightly higher on Monday as ongoing tensions involving Iran and the absence of a peace agreement with the United States continued to raise concerns about global supply disruptions. Traders remained focused on developments surrounding the Strait of Hormuz, one of the world’s most important oil shipping routes, where transport activity has remained limited amid the conflict.
Brent crude futures gained 67 cents, or 0.6%, reaching $108.84 a barrel by 0400 GMT after closing lower on Friday with a decline of $2.23. U.S. West Texas Intermediate crude also climbed 65 cents, or 0.6%, to $102.59 a barrel following a sharp drop of $3.13 in the previous trading session.
Analysts said the market continued to receive strong support from fears over supply shortages and geopolitical instability in the Middle East. Investors remain concerned that any prolonged disruption to shipping in the Gulf region could significantly tighten global oil supplies and place further upward pressure on prices.
Priyanka Sachdeva, an analyst at Phillip Nova, said the market environment remains highly sensitive to developments in the region. She explained that persistent supply disruptions and uncertainty surrounding the conflict were helping to keep prices elevated.
“Unless there is a clear and sustained resolution that restores normal flows through the Strait of Hormuz, oil prices are likely to remain elevated, with risks still tilted toward further upside,” she said.
The Strait of Hormuz is considered one of the most strategically important waterways in the global energy market, with a significant portion of the world’s oil exports passing through it each day. Any interruption to shipping activity in the area can quickly affect fuel markets worldwide, increasing costs for businesses and consumers alike.
President Donald Trump said the United States would begin efforts to assist ships stranded near the Strait of Hormuz, but traders appeared unconvinced that the situation would improve quickly. Oil prices remained above the $100-a-barrel mark as negotiations between Washington and Tehran showed little immediate progress.
Diplomatic discussions between the United States and Iran reportedly continued over the weekend, with both sides reviewing proposals and responses related to a possible agreement. However, major differences remain unresolved. Trump has made securing a new nuclear agreement with Tehran a major foreign policy objective, while Iran has indicated that it wants broader issues addressed before returning fully to nuclear negotiations.
Iranian officials have reportedly insisted that discussions over nuclear activities should be delayed until after the conflict eases and restrictions affecting Gulf shipping routes are lifted. The ongoing disagreements have added to uncertainty in global energy markets and raised concerns that the conflict could continue for an extended period.
Adding another layer to the market outlook, the Organization of the Petroleum Exporting Countries and its allies, collectively known as OPEC+, announced on Sunday that it would increase oil production targets by 188,000 barrels per day in June for seven member countries. The decision marked the third consecutive monthly output increase by the group.
The planned increase is similar to the adjustment agreed for May, although it excludes the production share previously assigned to the United Arab Emirates after the country exited OPEC on May 1. Despite the announcement, many analysts believe the additional supply may not significantly ease market pressures in the short term.
Experts noted that much of the planned output increase could remain largely theoretical as long as the conflict involving Iran continues to disrupt oil shipments passing through the Strait of Hormuz. Concerns over transportation bottlenecks, insurance risks for cargo vessels, and possible military escalation have continued to overshadow efforts by producers to reassure markets.
Energy traders are expected to closely monitor developments in the Middle East throughout the week, with future price movements likely to depend heavily on diplomatic progress, shipping conditions in the Gulf, and the ability of oil producers to maintain stable exports during the crisis.