Oil Rises as Iran Tensions Persist

WTI crude oil futures climbed back toward $100 per barrel on Wednesday, trimming earlier gains of more than 3% after President Donald Trump signaled a possible deal to end military operations in Iran, while still warning of major strikes on key infrastructure including Kharg Island if the Strait of Hormuz is not reopened. Prices had moved higher earlier as additional US troops were deployed to the region and Iran backed Houthi forces in Yemen joined the conflict, escalating tensions. The war has largely blocked the vital Hormuz passage, through which about a fifth of global oil flows, raising fears of further supply disruptions and pushing crude sharply higher in recent weeks. The conflict, now in its fifth week, has intensified attacks across the region and lifted oil prices by around 50% over March, marking one of the steepest monthly rallies on record.

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.