Oil prices have surged to their highest level since June 2022. With no end in sight to the U.S.-Iran conflict and energy shipments through the Strait of Hormuz remaining disrupted, concerns are intensifying that global supply buffers are being rapidly depleted.
The global benchmark Brent crude rose by more than 7% at one point, climbing above $119.50 per barrel, before giving up some gains and settling around $118. Trading activity was heightened as traders rolled over positions ahead of the June contract's expiration on Thursday. WTI crude closed below $107 per barrel.
At the close: - June WTI crude rose 7%, settling at $106.88 per barrel. - June Brent crude increased 6.1%, closing at $118.03 per barrel. - The more actively traded July contract finished at $110.44 per barrel.
Brent crude has now erased all losses incurred after the U.S. and Iran agreed to a temporary ceasefire earlier this month. Investors are preparing for a prolonged conflict and further repercussions from unprecedented supply disruptions and a global energy crisis.
Multiple signs indicate that peace talks have reached a stalemate. These include a meeting on Tuesday between the U.S. President and executives from the oil and trading industries, where discussions centered on measures the U.S. could take to extend its maritime blockade of Iran. Reports also indicated that the U.S. President rejected Iran's recent proposal to reopen the Strait of Hormuz.
Robert Yawger, head of energy futures at Mizuho Securities USA, stated, "Until there is a plan to end this chaos, or at least a plan to reopen the Strait of Hormuz, the market will continue to move higher."
Widespread expectations that the conflict will persist have shifted greater attention to U.S. oil supplies, which are seen as crucial for offsetting disruptions from the Middle East. Government data released on Wednesday showed domestic crude inventories declining as U.S. oil exports soared to a record high.
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