Oil Extends Rally as Iran Standoff Drags On, Supply Fears Intensify 

Mumbai, April 28: Oil prices extended their rally on Tuesday as tensions in the Middle East refused to simmer down, keeping global supplies of the fuel in check.   

Brent crude futures rose to around $109 per barrel, while U.S. West Texas Intermediate (WTI) crude traded around $97, with prices climbing after the previous session’s sharp gains that had already bumped up rates to multi-week highs.  

Supply Disruptions 

Surging prices of oil come on the back of supply disruptions in the Strait of Hormuz—a critical artery through which passes about 20% of global oil and gas shipments. The ongoing Iran-US standoff continues to choke the waterway limiting oil supply across the globe.   

And now that the efforts to end the conflict seem to be heading nowhere, oil is jumping and sentiment is worsening.  

To be sure, the latest Iranian proposal to end hostilities failed to gain traction with the United States, leaving negotiations deadlocked and prolonging uncertainty in the region. As a result, traders are increasingly focusing less on diplomatic rhetoric and more on actual physical supply disruptions, which continue to underpin prices. 

Tanker Traffic 

Shipping activity through the Strait has been severely impacted, with tanker traffic dropping sharply from pre-conflict levels. Data indicates that several vessels have been forced to turn back due to blockades, highlighting the scale of disruption in energy logistics.  

Market participants say the persistence of supply constraints is now the dominant driver of oil prices. Even in the event of a diplomatic breakthrough, analysts caution that restoring normal flows could take time due to production outages and logistical bottlenecks built up during the conflict.  

Concerns Re-ignite 

The latest surge in crude has also reignited concerns around inflation and input costs globally. Higher oil prices tend to ripple through transport, manufacturing and consumer goods, potentially complicating the outlook for central banks already navigating a fragile growth environment. 

The broader context underscores the scale of the disruption. Since the conflict began earlier this year, oil markets have seen sharp volatility, with prices reacting quickly to developments around the Strait of Hormuz and shifting expectations around supply.  

For now, the absence of a clear path toward de-escalation is keeping a firm floor under prices. With supply still constrained and geopolitical risks elevated, oil markets are likely to remain volatile in the near term, with traders closely tracking any signs of progress—or further deterioration—in the conflict. 

Source: 

• https://oilprice.com/