Oil Prices Remain Steady Amid Iran Conflict and Strait of Hormuz Closure

Oil prices were little changed on Tuesday as investors weighed the possibility of US President Donald Trump ending the Iran war against ongoing supply disruptions from a prolonged closure of the Strait of Hormuz, a critical route for global oil shipments.

Brent crude futures for May rose 18 cents, or 0.16 percent, to $112.96 per barrel at 7:38 a.m. Saudi time, after earlier falling 1 percent. The May contract expires on Tuesday, while the more active June contract stood at $107.10. US West Texas Intermediate (WTI) futures for May fell 25 cents, or 0.24 percent, to $102.63 per barrel after hitting their highest level since March 9 earlier in the session.

Analysts said the slight drop reflects short-term market reaction to the idea of the conflict ending, but substantial price changes are unlikely until oil flows through the Strait of Hormuz are fully restored.

Trump has told aides he is willing to end the military campaign against Iran even if the strait remains largely closed, postponing its reopening to a later date, according to The Wall Street Journal. On Monday, he warned the US would “obliterate” Iran’s energy infrastructure if Tehran did not reopen the waterway.

The closure of the Strait of Hormuz, which typically carries about 20 percent of global oil supplies and numerous liquefied natural gas shipments, has pushed Brent futures up 59 percent in March, marking the largest monthly gain on record. WTI has risen 58 percent this month, its biggest jump since May 2020.

“While diplomatic signals remain mixed, the ground reality suggests uncertainty will persist,” said Sugandha Sachdeva, founder of New Delhi-based research firm SS WealthStreet. She added that even if tensions ease, repairing damaged infrastructure will take time, keeping supplies tight.

Kuwait Petroleum Corp reported on Tuesday that its fully loaded crude tanker, Al Salmi, capable of carrying up to 2 million barrels, was struck by an alleged Iranian attack at a Dubai port, raising concerns over potential oil spills. On Saturday, Yemen’s Iran-aligned Houthi forces launched missiles at Israel, prompting fears of further disruptions to the Bab el-Mandeb strait, a key shipping lane linking the Red Sea and Gulf of Aden.

Saudi Arabia has rerouted crude exports through the Red Sea port of Yanbu, with volumes reaching 4.658 million barrels per day last week, up from an average of 770,000 bpd in January and February, according to Kpler data.

“With the oil market’s remaining buffers gradually being consumed, a prolonged closure of the strait increases the risk of physical shortages across a wider region,” said Lin Ye, vice president for commodities markets at Rystad Energy. She added that upward momentum for oil prices could continue if disruptions persist.

In the US, crude inventories were expected to have declined last week, along with gasoline and distillate stockpiles, according to a preliminary Reuters poll, signaling tighter supplies amid rising global tensions.