Oil Keeps Climbing Relentlessly

Crude oil prices posted a notable advance during Tuesday’s trading session, driven by growing uncertainty surrounding peace efforts between the United States and Iran and the increasing risk of renewed tensions across the Middle East.

West Texas Intermediate crude surged by roughly four dollars, or 4.1%, while gasoline prices rose by less than one dollar, or 3.1%, reflecting a strong rally across the energy sector.

The move higher came after U.S. President Donald Trump cast doubt on the durability of the ceasefire with Iran, describing the current agreement as being “on life support,” as both sides rejected the latest proposals aimed at ending the conflict that has now lasted for ten weeks.

Market concerns intensified amid the possibility that the Strait of Hormuz could remain closed. The strategic waterway carries nearly one-fifth of global oil and liquefied natural gas supplies, raising fears of tighter worldwide supply conditions and further upward pressure on prices.

Estimates from Goldman Sachs indicated that oil production across the Gulf region has fallen by about 14.5 million barrels per day. At the same time, the crisis has resulted in the withdrawal of nearly 500 million barrels from global inventories, with projections suggesting the figure could reach one billion barrels by June.

Meanwhile, the closure of the strait has forced Gulf oil producers to cut output by around 6.00% because of overflowing domestic storage facilities. The International Energy Agency also reported that approximately 14 million barrels per day of global supply have been disrupted by the war, while more than 80 energy facilities have suffered damage, with recovery efforts potentially taking up to two years.

Despite negative pressure factors, including OPEC+ announcing on May 3 its intention to increase production by 188,000 barrels per day in June after raising output by about 206,000 barrels per day in May, those increases appear increasingly uncertain as Middle Eastern producers are being forced to reduce production because of the conflict.

Current price movements reflect an exceptionally tense global market environment, with developments in the U.S.-Iran conflict remaining the key factor shaping the direction of energy markets in the period ahead.