Oil prices continued their ascent as the U.S. President extended a ceasefire with Iran, although a blockade in the Strait of Hormuz continues to restrict petroleum supplies. WTI crude futures hovered near $90 per barrel, having climbed nearly 10% over the previous two trading sessions, while Brent crude futures settled just below $99. On Tuesday, the President stated that the U.S. would postpone new strikes against Iran but would maintain the interception of vessels linked to Iran until "negotiations conclude in some form."
Oil markets experienced significant volatility due to developments in the Persian Gulf and the near standstill of shipping through the Strait of Hormuz. This critical waterway typically handles about one-fifth of the world's crude shipments. Price volatility has surged to its highest level since 2020, when the COVID-19 pandemic caused a sharp drop in demand.
"Headlines keep coming, but actual crude supply remains constrained," said Rebecca Babin, Senior Energy Trader at CIBC Private Wealth Group. "The back-and-forth over the truce extension, potential blockade, and Iran's role is making the market nervous, but the reality is that oil supply is still tight."
According to the semi-official Tasnim News Agency, citing informed sources, Iran will not reopen the strait as long as the U.S. Navy continues intercepting vessels and is prepared to use force to break the blockade if necessary. The U.S. announced on Tuesday that, following the seizure of a cargo ship over the weekend, it had intercepted and boarded another sanctioned oil tanker.
As of 6:57 Singapore time, WTI crude futures for June delivery rose 0.8% to $90.35 per barrel. Brent crude futures for June settlement closed 3.1% higher on Tuesday at $98.48.
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