Crude Rises On Iran-US Standoff

Oil rose as peace negotiations between the US and Iran stalled, with both sides using blockades of the vital Strait of Hormuz to try and gain leverage in a seven-week war that has upended global energy markets.

Brent futures settled above $101 a barrel in New York, the highest in two weeks, amid conflicting reports about plans to reschedule peace talks which have ultimately failed to materialize. Washington and Tehran remain deadlocked on several key issues, including the Islamic Republic’s nuclear capabilities and Israel’s invasion of Lebanon.

Iranian gunboats fired on a cargo vessel and a container ship in the strategic waterway Wednesday, according to UK Maritime Trade Operations, a naval liaison with the shipping industry. The attacks are the latest in a series of maritime incidents sparked by the conflict. Traffic through Hormuz, a vital artery that normally carries about one-fifth of global crude flows, remains at a near-halt.

US President Donald Trump extended a ceasefire with Iran indefinitely, but also maintained a naval blockade on ships going to and from the country’s ports to pile pressure on its government, another bullish signal for oil prices.

Traders also closely followed key US oil inventory data published Wednesday by the Energy Information Administration, which showed declines across all major refined product categories. The world has been looking to US supplies to offset disruptions from the Middle East. Heightened export demand pushed total oil and fuel exports to a fresh record, according to the agency.

Volatility has soared to its highest since 2020, when the Covid pandemic sapped demand. The Washington Post reported that the Pentagon has informed Congress it could take six months to fully clear the waterway of mines deployed by the Iranian military, citing three officials familiar.

"President Trump’s decision to extend the ceasefire indefinitely indicates a belief that economic warfare is more effective than kinetic warfare at this stage in the conflict," said Will Todman, senior fellow in the Middle East Program at the Center for Strategic and International Studies. "He is hoping that Iranian leaders blink first as the economic toll of the US blockade mounts on their economy."

Trump later on Wednesday said in a post on Truth Social that if the US lifted its blockade to open the Strait of Hormuz, "there can never be a Deal with Iran, unless we blow up the rest of their Country, their leaders included!"

Iran won’t reopen the strait as long as the US Navy continues to intercept ships and will, if necessary, break the blockade by force, Tasnim reported. Iran has maintained that the blockade is a violation of the ceasefire.

The US on Tuesday said it stopped and boarded a sanctioned oil tanker, after seizing a cargo ship over the weekend, and said it has directed to turn around or return to port a total of 29 vessels.

At least two fully laden Iranian tankers have sailed out of the Persian Gulf and past the US blockade this week. The exit of the tankers demonstrates the limits of US efforts to curb Tehran’s crude exports.

"Our base assumption is shifting toward a slower normalisation of Persian Gulf flows by mid-May, rather than the earlier expectation of improvement by late April," Societe Generale SA analysts including Ben Hoff wrote in a note. The change alone is prompting the bank to consider raising its year-end Brent price forecast from $79 a barrel to $85, the analysts said.

"Even so, this revised level may still underestimate both the difficulty and duration of normalisation, particularly given the scale of shut-ins and the constraints around shipping, insurance, port damage, and debris clearance."

The prolonged conflict has fueled backlash over the Trump administration’s handling of rising energy prices. Treasury Secretary Scott Bessent rejected a claim that Iran has received $14 billion thanks to the Trump administration’s sanction relief on Iranian oil in a bid to tamp down energy prices. Bessent also said prices "might have been at $150" if not for the move to implement price relief.

Oil Prices

• WTI for June delivery increased 3.7% to settle at $92.96 a barrel in New York.
• Brent for June settlement rose 3.5% to settle at $101.91 a barrel.