Oil prices increased amid volatile trading on Monday as investors reacted to escalating tensions in the Middle East. President Donald Trump issued an ultimatum to Iran to reopen the Strait of Hormuz or face strikes on its energy infrastructure. In response, Iran indicated that it would consider electric plants and water facilities in the region “legitimate targets” if its grid were attacked.
International benchmark Brent crude futures for May delivery rose 1% to $113.32 per barrel, while U.S. West Texas Intermediate (WTI) crude increased approximately 2.8% to $101.01. Goldman Sachs raised its oil price forecasts, predicting Brent to average $110 in March and April, up from an earlier estimate of $98. The bank also adjusted WTI projections to $98 in March and $105 in April.
The Strait of Hormuz, a critical passage for approximately 20% of global oil supplies, has experienced significant shipping disruptions since a U.S.-Israel assault on Iran on February 28. Iranian state media stated that Tehran would permit safe passage for ships not linked to its adversaries.
Natural gas prices in the U.S. rose by 0.9%, trading at $3.123 per million British thermal units. April delivery gasoline also increased by 1.4% to $3.332, nearing four-year highs. The International Energy Agency (IEA) characterized the current situation as more severe than past oil shocks, urging a solution that includes reopening the Strait.
The price difference between Brent and WTI crude surpassed $14 per barrel, the highest spread in years. This indicates that Brent’s value is more sensitive to geopolitical issues, as WTI is less affected by maritime supply disruptions.
Experts suggest that the U.S. remains somewhat insulated from the crisis, given its status as the world’s largest oil producer and recent shipments from its strategic petroleum reserves. The widening price gap may reflect a market approaching the peak intensity of the current oil crisis, with investors anticipating a prolonged conflict.
Source: Reported based on publicly available information from www.cnbc.com.
