LONDON: Oil prices experienced a notable increase on Friday as market participants expressed growing skepticism regarding a potential ceasefire in the month-long conflict involving Iran. Despite recent optimistic comments from U.S. President Donald Trump suggesting that negotiations were progressing, Brent crude and West Texas Intermediate futures both saw significant intraday gains. Brent crude rose by 2.45 percent to reach $110.66 a barrel, while WTI jumped 3.4 percent to settle at $97.65.
The global energy market remains on edge as traders weigh political headlines against the reality of physical supply disruptions. Since the onset of military action by the U.S. and Israel on February 27, the Brent benchmark has surged by 53 percent. Analysts point out that while the market saw a slight weekly decline due to diplomatic hopes, the underlying fundamentals remain stressed. An Iranian official recently described a U.S. proposal conveyed via Pakistan as one-sided, further dampening hopes for an immediate resolution.
The International Energy Agency has classified the current situation as more severe than the combined oil shocks of the 1970s. With approximately 11 million barrels per day removed from the global supply, the restriction of the Strait of Hormuz continues to tighten the market. President Trump has extended a deadline for Iran to reopen the strategic waterway, threatening the destruction of energy infrastructure if compliance is not met. Furthermore, reports indicate the U.S. is considering the deployment of additional troops to seize the strategic oil hub of Kharg Island.
Market experts at Macquarie Group warned that while prices could stabilize if the war winds down, a prolonged conflict lasting until June could see crude prices skyrocket to $200 per barrel. Adding to the volatility, Russian producers have warned of potential force majeure on Baltic Sea supplies following recent attacks on their infrastructure. As the Middle East remains a focal point for haven demand, the oil market continues to trade on the longevity of the war rather than short-term diplomatic signals.
