Oil Gains Amid Rising US-Venezuela Tensions

Crude oil started the week about 3% higher, trading above $102 and remaining at its highest level since July 2022, when Russia’s invasion of Ukraine disrupted global energy markets. As the war in Iran entered its fifth week, investors grew increasingly doubtful about the prospects for a swift resolution, particularly after Iran-backed Houthi militants in Yemen joined the conflict and additional US troops were deployed to the region. The Houthis fired missiles at Israel over the weekend and signaled that attacks would continue until strikes against Iran and its proxies cease. The militant group also has the capacity to target vessels transiting the Red Sea and key Saudi Arabian energy infrastructure. Meanwhile, the US military is reportedly preparing for weeks of ground operations in Iran after ordering thousands of troops to the region. Trump also said he could “take the oil in Iran” and seize its export hub on Kharg Island, echoing the recent US military operation in Venezuela.

Crude oil futures surged over 5% to top $99 per barrel on Friday reaching their highest level since July 2022 as fresh disruptions in the Strait of Hormuz overshadowed diplomatic gestures. While President Trump extended the strike deadline for Iranian energy infrastructure to April 6 market skepticism remains high following reports that the Pentagon is considering the deployment of 10,000 additional US troops. Tensions escalated further as Iran's Islamic Revolutionary Guard Corps announced a harsh response to any movement through the waterway after turning away two Chinese ships and seeing a Thai-flagged cargo ship run aground. Although earlier reports noted a brief passage of ten tankers the effective closure of the narrow passage continues to choke a fifth of global energy flows and keeps WTI prices up 40% since the onset of the conflict. Investors now weigh the impact of potential ground conflict against the promised insurance programs intended to support future shipping.

Oil crude futures rose back above $98 per barrel on Friday, near the highest since July 2022, amid skepticism that the US and Iran could reach a deal to end the war soon. Reports indicate the Pentagon is considering sending up to 10,000 additional ground troops to the Middle East, while Iran is said to be mobilizing over 1 million troops in response. Meanwhile, President Donald Trump extended the deadline for a planned strike on Iranian energy infrastructure to April 6 to allow for negotiations, saying talks with Tehran were going “very well.” Trump also noted that Iran had allowed 10 oil tankers to pass through the Strait of Hormuz this week as a gesture of goodwill, while Treasury Secretary Scott Bessent said an insurance program to support shipping through the waterway would begin soon. WTI prices remain up roughly 40% since the conflict began, as Tehran effectively closed the narrow waterway through which about a fifth of global energy flows.