Oil prices remained virtually unchanged on Tuesday as investors closely monitor developments regarding a potential de-escalation of the military conflict between the U.S. and Iran. The main factor for the market continues to be reports of a possible cessation of hostilities and the subsequent impact on oil supplies through key transportation routes.
This is reported by Finway
Dynamics of Global Oil Prices
Brent crude oil futures for May delivery rose by 18 cents, or 0.16%, reaching $112.96 per barrel. This occurred after a 1% decline earlier in the session. It is worth noting that the May contract expires on Tuesday, while the more actively traded June contract is priced at $107.10 per barrel. Meanwhile, West Texas Intermediate (WTI) futures for May delivery fell by 25 cents, or 0.24%, settling at $102.63 per barrel after hitting the highest level since March 9 at the beginning of trading.
Analysts point out that the current price decline is a short-term reaction to the prospect of ending military actions. However, no fundamental changes in the market will occur until full oil supplies through the Strait of Hormuz are restored.
Impact of Geopolitical Tensions on the Market
Reportedly, U.S. President Donald Trump expressed a willingness to halt the military campaign against Iran, even if the Strait of Hormuz remains largely closed, with the issue of its reopening to be addressed later. At the same time, Trump warned that the United States is prepared to destroy Iranian energy facilities and oil wells if Tehran does not unblock this strategic maritime route.
“While diplomatic signals remain ambiguous, the real situation on the ground indicates that uncertainty will persist. Even in the event of de-escalation, the restoration of damaged infrastructure will take time, leading to supply shortages,” noted Suganda Sachdeva, founder of the research firm SS WealthStreet.
The Strait of Hormuz is a key route for global energy supplies: approximately one-fifth of global oil exports pass through it, along with a significant number of tankers carrying liquefied natural gas. In March, the closure of the strait by Iran caused Brent crude prices to surge by 59%—a record monthly increase. WTI futures rose by 58%, the largest gain since May 2020.
Additionally, on Saturday, Iran-aligned Houthi forces in Yemen launched a missile strike against Israel, heightening concerns about disruptions to shipping routes between Asia and Europe via the Suez Canal and the Bab-el-Mandeb Strait. As a result, Saudi oil exports were redirected along this route, with volumes arriving from the Persian Gulf to the Yanbu port on the Red Sea reaching 4.658 million barrels per day last week—a significant increase compared to the average of 770,000 barrels in January and February.
Experts emphasize that the reduction of reserves in the oil market and the possibility of prolonged closure of the Strait of Hormuz create a risk of physical shortages on a broader geographical scale, and the trend of rising prices may intensify.
It is estimated that Iran has managed to capitalize on the situation of war in the Middle East, significantly increasing its own oil exports while limiting opportunities for other suppliers passing through the Strait of Hormuz.