Oil prices have stabilized amid speculation that the U.S. war with Iran may be coming to an end
On Tuesday, oil prices remained virtually unchanged as investors weighed the likelihood that U.S. President Donald Trump would halt military action against Iran.
This was reported by Reuters.
Brent crude futures for May delivery rose 18 cents, or 0.16%, to $112.96 per barrel after falling 1% earlier in the session. The more actively traded June contract was trading at $107.10.
U.S. West Texas Intermediate (WTI) crude oil futures for May delivery fell by 25 cents, or 0.24%, to $102.63 per barrel after reaching their highest level since March 9 at the start of trading.
Analysts note that the price drop is a temporary reaction to the prospect of the war ending, but any significant changes will only occur after the full restoration of supplies through the Strait of Hormuz.
Earlier, The Wall Street Journal reported that Trump told his aides he was prepared to halt the military campaign against Iran even if the Strait of Hormuz remained partially closed, and to postpone reopening it to a later date. At the same time, the president warned that the U.S. would “destroy” Iranian energy facilities and oil wells if Tehran did not reopen the waterway.
The effective closure of the Strait of Hormuz, through which about one-fifth of global oil supplies and a significant number of liquefied natural gas tankers pass, led to a 59% increase in Brent futures in March—the highest monthly gain in history. WTI futures rose 58%, marking the largest increase since May 2020.
“Although diplomatic signals remain mixed, the reality on the ground suggests that uncertainty will persist. Even if the conflict de-escalates, restoring damaged infrastructure will take time, leading to supply shortages,” noted Suganda Sachdeva, founder of the research firm SS WealthStreet.
On Saturday, pro-Iranian Houthi forces in Yemen fired rockets at Israel, sparking new fears of disruptions to the key shipping route between Asia and Europe through the Suez Canal—the Bab el-Mandeb Strait. As a result, Saudi oil exports were rerouted to the port of Yanbu on the Red Sea, and shipments last week reached 4.658 million barrels per day, while the average in January and February was 770,000 barrels per day.
“As reserves in the oil market are gradually being depleted, the market’s vulnerability to a prolonged closure of the strait means we are approaching a physical oil shortage on a broader scale, and the upward trend in prices is likely to intensify even further,” noted Lin Ye, Vice President of Commodity Markets and Oil at Rystad Energy.
As a reminder, the global energy market was shaken by a new wave of rising oil prices following a series of attacks by Yemeni Houthis on Israeli territory.
As a reminder, the conflict surrounding Iran has seriously impacted financial markets.
Additionally, the small island of Khark is key to Iran’s economy.
