Global oil prices climbed sharply as fears of supply disruptions intensified amid the ongoing conflict involving the United States, Israel, and Iran.
Benchmark Brent crude rose 1.6% to $110.74 per barrel, while West Texas Intermediate gained 0.6% to $112.25, extending gains after last week’s sharp rally.
Supply Fears Drive Market Volatility
Oil markets remain on edge as the Strait of Hormuz a critical artery for global energy supplies faces ongoing disruption due to Iranian attacks on shipping.
The waterway, which handles exports from major producers including Iraq, Saudi Arabia, Qatar, Kuwait, and the United Arab Emirates, has seen restricted movement, fuelling concerns of a prolonged supply shock.
Refiners Scramble for Alternatives
With Middle Eastern supplies under strain, refiners are increasingly turning to alternative sources, particularly from the US Gulf Coast and the North Sea.
Market participants report aggressive bidding for available cargoes, pushing benchmark prices higher and intensifying competition among global buyers.
Escalation Risks Persist
US President Donald Trump has escalated tensions, warning of further strikes on Iranian infrastructure if the Strait of Hormuz is not reopened.
Despite this, limited shipping activity has resumed, with vessels from countries considered friendly by Tehran allowed to pass, signalling a selective easing rather than a full reopening.
Diplomatic Efforts Stall
Efforts to broker a ceasefire appear to have stalled, with Iran reportedly unwilling to engage in talks with US officials in Islamabad.
The lack of diplomatic progress has reinforced market concerns that the conflict could drag on, prolonging supply uncertainty.
OPEC+ Response and Supply Constraints
The OPEC+ group has agreed to a modest production increase of 206,000 barrels per day for May.
However, analysts note that the increase may have limited impact, as several producers face constraints linked to the conflict.
Russian exports have also been affected by recent disruptions, adding another layer of uncertainty to global supply chains.
Market Outlook
With geopolitical risks mounting and supply routes under pressure, oil markets are likely to remain volatile in the near term.
Much will depend on whether tensions ease or further escalate in one of the world’s most critical energy corridors.
(with inputs from Reuters)
