KEY POINTS
- Oil prices rose over 1% as Middle East tensions offset reports that the US-Israeli war on Iran may soon end.
- Brent crude extended gains after posting a record 64% increase in March, while WTI also climbed.
- Supply disruptions, including OPEC output cuts, Strait of Hormuz risks, and lower US production, continue to support higher prices.
Oil prices rose by more than one percent on Wednesday, with Brent crude extending gains after recording a historic monthly surge in March. Market sentiment remained tense due to ongoing uncertainty in the Middle East, even as reports suggested the US-Israeli war on Iran could be nearing an end.
The front-month Brent contract for June delivery climbed $1.40, or 1.4 percent, to $105.37 per barrel at 0430 GMT. According to LSEG data dating back to June 1988, Brent posted a record 64 percent monthly gain in March. Meanwhile, US West Texas Intermediate (WTI) crude futures for May increased by $1.59, or 1.6 percent, to $102.97 per barrel
Prices recovered part of Tuesday’s losses when Brent dropped more than $3 following unconfirmed reports that Iran’s president was prepared to end the conflict.
Conflict outlook and supply risks keep markets nervous
US President Donald Trump said the United States could end the military campaign within two to three weeks, adding that Iran would not necessarily need to reach a deal to conclude the conflict. The statement marked his clearest signal yet that Washington intends to wind down the month-long war.
Despite possible de-escalation, analysts warned that damage to energy infrastructure could continue to tighten supply. Priyanka Sachdeva, senior market analyst at Phillip Nova, noted that tanker movement, shipping costs, and insurance premiums would take time to normalise even after hostilities ease.
Trump also indicated that the conflict could end before the reopening of the Strait of Hormuz — a strategic route responsible for roughly 20 percent of global oil and liquefied natural gas trade — further fuelling supply concerns.
Analysts said limited diplomatic progress, continued maritime attacks, and threats to energy assets are keeping supply risks tilted upward. OPEC oil output dropped by 7.3 million barrels per day in March compared with the previous month, largely due to export disruptions caused by the strait’s closure.
In addition, US crude oil production declined sharply in January following a severe winter storm that disrupted operations across major producing regions, according to data from the Energy Information Administration. These combined supply shocks helped support the latest price rally.
