Oil extends gains with Brent at $120 as fears of an extended U.S.-Iran conflict rise
Alexander Manzyuk | Reuters
Oil extended gains on Thursday as a prolonged U.S. blockade of Iranian exports and stalled nuclear talks raised fears that supplies will remain tight for longer.
The gains come after Axios reported that US President Donald Trump rejected Tehran’s proposal to reopen the Strait of Hormuz and signaled that the naval blockade would continue until a broader nuclear deal is reached.
Brent crude oil rose 1.96% to nearly $120 per barrel, while US West Texas Intermediate crude oil rose 0.2% to $107.09.
Prices rose on Wednesday, as The Wall Street Journal reported, based on US officials, that Trump had instructed his aides to prepare for a long-term blockade of Iran.
Trump threatened Iran in a post on Truth Social on Wednesday, saying the country “better get smart soon!” he said.
“Iran just can’t take action. They don’t know how to sign a non-nuclear agreement. They better get smart as soon as possible!” Trump said. Post An AI-generated image of Trump holding a gun, explosions in the background, and the words “NO MORE MR. GOOD GUYS!”
Brent oil prices
Oil prices have risen to their highest levels since mid-2022, according to data provided by Goldman Sachs.
The bank estimates that exports through the Hormuz crossing point have fallen to just 4% of normal levels, while US-Iran negotiations have stalled and the ongoing US blockade has tightened supply.
Iran’s limited exports and limited storage capacity could deepen supply cuts if the blockade continues, bank analysts said, adding that the production increase from the UAE following OPEC’s exit is likely to occur more gradually in the medium term rather than offsetting the short-term squeeze.
However, the bank pointed out that downside risks to demand have emerged, stating that global oil consumption in April may be approximately 3.6 million barrels per day lower than February levels, and that the weakness is concentrated in jet fuel and petrochemical raw materials.
— CNBC’s Holly Ellyatt contributed to this report.
