Oil Extends Rally Amid US-Iran Tensions

WTI crude futures rose above $106 per barrel on Monday, building on last week’s gains as stalled US-Iran peace talks and the continued near-shutdown of the vital Strait of Hormuz kept global supply concerns elevated. President Donald Trump warned that Tehran is running out of time to reach an agreement with Washington, while Iranian media reports indicated the two sides remain deeply divided, with the US offering “no tangible concessions” during negotiations. Over the weekend, energy infrastructure across the Persian Gulf also came under attack, including a nuclear facility in the United Arab Emirates. At the same time, the Trump administration allowed a waiver permitting Russian crude sales to expire despite India’s appeal for an extension, adding further pressure to already constrained supplies. Meanwhile, last week’s two-day summit between Trump and Chinese President Xi Jinping ended without any concrete progress toward reopening the Strait of Hormuz.

WTI crude oil futures climbed more than 4.5% to near $106 per barrel on Friday and booked a weekly gain of 11% as the Strait of Hormuz remained effectively closed, keeping global supply concerns elevated. Efforts to end the conflict remain stalled, with disruptions continuing to impact energy markets and fuel inflation fears. President Donald Trump delivered mixed messages on the situation, first saying the US did not need the Strait open before later stating alongside Chinese President Xi Jinping that “we want the straits open.” The International Energy Agency warned this week that the oil market could remain severely undersupplied until October even if fighting ends next month. Oil inventories continue to tighten, while tanker traffic through Hormuz remains extremely limited, with only a small number of vessels managing to leave the Persian Gulf since the conflict began.

WTI crude futures rose above $103.5 per barrel on Friday and were on track for a weekly gain of about 10%, as risks in the Strait of Hormuz persisted amid stalled US-Iran peace talks. President Trump on Thursday warned Iran to reach a deal or face “annihilation,” saying his patience with Tehran was running out. His remarks came even as Iran said around 30 ships had crossed the Strait since Wednesday evening. The US and Iran failed to agree on a US-drafted peace proposal earlier this week, leaving the key waterway largely closed. Optimism for a lasting ceasefire has also faded. Meanwhile, the IEA reported that crude and fuel flows through the Strait fell by around 4 million bpd in March and April, warning that the global oil market could remain materially undersupplied through October even if the conflict is resolved next month. Separately, Trump said China wants to buy oil from the US amid ongoing challenges in reopening the Strait, with ship attacks and seizures reported this week.