Oil Prices Rise as Investors Brace for Prolonged Middle East Conflict

Oil prices moved higher on Friday despite Donald Trump extending a temporary pause on attacks targeting Iran’s energy infrastructure, as uncertainty over the duration of the conflict continued to weigh on markets.

Brent crude rose by $1.59 to trade at $106.60 per barrel, while US West Texas Intermediate futures climbed $1.49 to $95.97 per barrel by midday trading. The gains came even as diplomatic signals pointed to a short-term easing of hostilities, highlighting investor concerns that a lasting resolution remains out of reach.

Market analysts said oil prices are being driven less by headlines about negotiations and more by expectations that the conflict could continue. “Despite talks of de-escalation, oil is trading on war longevity, not just headlines,” said Priyanka Sachdeva, an analyst at Phillip Nova. She warned that any direct damage to oil facilities or an extended conflict could push prices significantly higher.

The tensions have centered on the Strait of Hormuz, a crucial route for global energy supplies. The United States has set an April 6 deadline for Iran to reopen the passage, with Trump warning of potential strikes on energy infrastructure if access is not restored. At the same time, Washington has deployed thousands of troops to the region, raising speculation about possible military escalation, including plans involving Iran’s key oil export hub at Kharg Island.

Diplomatic efforts have yet to gain traction. An Iranian official described a US proposal, reportedly consisting of 15 points and conveyed through Pakistan, as “one-sided and unfair.” The lack of agreement has reinforced expectations that the conflict could persist in the near term.

The impact on global oil supply has been significant. Around 11 million barrels per day have been removed from the market, according to estimates cited by the International Energy Agency, which has described the situation as more severe than the oil shocks of the 1970s combined with the disruptions caused by the Russia-Ukraine conflict.

Analysts at Macquarie Group said that if the conflict eases soon, oil prices could decline in the coming months, though they are likely to remain above pre-war levels. However, they warned that prices could climb as high as $200 per barrel if hostilities continue through June.

Growing pressure is also being felt in Asia, where countries are drawing on strategic reserves and considering measures to curb demand. Mukesh Sahdev, head of consultancy XAnalysts, said that “with each passing day, market pressure is building,” reflecting mounting concerns about supply shortages.

Financial markets remain sensitive to developments in the region, with traders closely watching both military activity and diplomatic signals for clues on the trajectory of oil prices in the weeks ahead.