Oil Prices Fluctuate as Markets Assess Supply Risks

SadaNews - Oil prices fluctuated after Iran stated that crude flows were continuing from its main export hub following a U.S. attack on military facilities, while President Donald Trump intensified pressure on countries to help reopen the Strait of Hormuz.

Brent crude was trading around $105 per barrel after rising earlier by 3.3%, while West Texas Intermediate (WTI) crude was near $99. Futures had risen over 40% in the past two weeks.

Tehran launched retaliatory attacks on Israel and Arab countries after the U.S. targeted military sites on Kharg Island, which handles the majority of Iranian oil shipments.

The Iranian news agency Fars reported that exports from the island were continuing normally. The Iranian military stated that areas hosting U.S. forces in Doha and Dubai could be targeted, according to Fars early Monday. Dubai International Airport temporarily suspended flights after a drone incident caused a fire.

War Duration Estimates

In a related context, Trump hinted that U.S. strikes did not target oil infrastructure on the island, asserting that U.S. forces could destroy it "within minutes".

Bloomberg cited Warren Patterson, head of commodity strategy at ING Groep NV, saying, "Although oil infrastructure doesn’t appear to have been damaged by the strikes on Kharg Island, supply risks are clearly increasing." He added, "Any disruption will lead to further tightening in the market."

Kevin Hassett, chairman of the White House Council of Economic Advisers, stated that the Pentagon's estimates for the war duration range from 4 to six weeks. However, he noted that the final decision on when the war ends remains in the president's hands.

Over the weekend, Trump hinted at the possibility of negotiations to end the conflict, although Iranian Foreign Minister Abbas Araghchi indicated that his country had not requested talks or a ceasefire.

Moves to Reopen the Strait of Hormuz

Recently, Trump has intensified his calls to reopen the Strait of Hormuz, urging allies to send warships to assist.

Trump reiterated this, asking China to help protect tankers because "90% of the oil they receive comes through the straits." He also indicated that NATO would face severe consequences if allies did not assist America against Iran.

On the other hand, the Wall Street Journal reported that the Trump administration plans to announce the formation of an alliance to escort vessels through the waterway, although discussions continue regarding whether operations will begin before or after the fighting ends.

French President Emmanuel Macron also confirmed, in a phone call with Iranian President Masoud Pezeshkian, the need to restore freedom of navigation in the Strait of Hormuz as soon as possible.

Macron urged his Iranian counterpart to "immediately stop the unacceptable attacks" by Iran on regional countries, whether directly or through proxies, including in Lebanon and Iraq, emphasizing that "France operates within a strictly defensive framework aimed at protecting its interests and those of its regional partners and ensuring freedom of navigation."

Measures to Curb Rising Prices

In an effort to curb rising prices, the International Energy Agency last week approved a plan to release 400 million barrels from emergency reserves.

Indicating the pressure the war imposes on global crude supplies, the agency stated on Sunday that oil resulting from the largest withdrawal from reserves in history would be made available immediately in Asia.

Bloomberg quoted Harris Khourchid, head of investment at Karobar Capital in Chicago, stating that "a large part of the geopolitical risk premium has already been priced in last week, so it seems traders are waiting for clearer signals of actual supply loss before pushing prices to significantly higher levels."

He added that after the attack on Kharg Island, "the market seems to be pricing in the possibility of disruption, not a full supply shock."

In the latest trades, Brent futures for May delivery rose 1.3% to $104.45 per barrel at 12:05 PM Singapore time, while West Texas Intermediate for April delivery fell 0.7% to $99.36 per barrel.