Oil prices showed limited movement despite heightened geopolitical rhetoric, as traders weighed fresh threats around the Strait of Hormuz. Brent crude hovered just below $112 per barrel, while US benchmark WTI remained near $98, reflecting a market that is alert-but not panicked.
US President Donald Trump's warning to Iran-to reopen the vital shipping route within 48 hours or face strikes on energy infrastructure-failed to trigger a sharp rally. Tehran's response, threatening broader regional attacks, added to tensions but did little to shift price direction in the immediate term.
Even without a dramatic spike, crude remains elevated. Prices have surged over 50% since late February, when US and Israeli strikes on Iran intensified the conflict. Notably, refined fuel markets have risen even faster, signalling deeper supply concerns.
This sustained rally is beginning to ripple across global markets, raising fears of renewed inflation and volatility in equities and bonds.
Hormuz: The Critical Chokepoint
At the center is the Strait of Hormuz, a crucial artery linking Gulf oil producers to global markets. With shipping activity severely restricted-save for limited, Iran-approved movements-export flows have been disrupted.
Producers in the Persian Gulf are now scrambling to reroute supplies or hold back output, tightening availability. The International Energy Agency has warned of an unprecedented supply shock, even as countries release emergency reserves to stabilise markets.
Complicating matters further is mixed messaging from Washington. Trump's aggressive ultimatum followed earlier indications of a possible military de-escalation, leaving investors uncertain about the US strategy. Meanwhile, the US has taken limited steps to ease supply pressures, allowing certain Iranian oil cargoes already at sea to be sold temporarily. Similar relaxations have been extended to Russian shipments in recent weeks.
Now in its fourth week, the conflict continues to escalate. Fresh strikes and retaliatory attacks across the region underscore the risk of further disruption. While oil markets have avoided knee-jerk reactions so far, the underlying risk premium remains firmly in place-keeping prices elevated and traders on edge.
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