NEW DELHI: Oil prices showed limited movement on Tuesday as investors balanced prospects of a potential de-escalation in the Iran conflict against ongoing supply risks from a prolonged closure of the Strait of Hormuz.
Brent crude futures for May edged up 18 cents, or 0.16%, to $112.96 per barrel at 0438 GMT, after earlier declining by 1% during the session. The May contract expires on Tuesday, while the more active June contract traded at $107.10.
US West Texas Intermediate (WTI) futures for May slipped 25 cents, or 0.24%, to $102.63 a barrel, after reaching their highest level since March 9 earlier in the day.
Analysts noted that the recent dip in prices reflects short-term reactions to expectations of a possible end to the conflict, but any sustained price shift would depend on the full restoration of oil flows through the Strait of Hormuz.
Reports indicated that US President Donald Trump is considering ending military operations against Iran even if the waterway remains largely closed, potentially delaying its reopening. He also warned that the US could “obliterate” Iran’s energy infrastructure if Tehran does not reopen the route.
Iran’s effective closure of the Strait of Hormuz through which roughly a fifth of global oil supply typically passes—has significantly driven up prices. Brent futures have surged 59% in March, marking their largest monthly gain on record, while WTI has climbed 58%, its biggest increase since May 2020.
“While diplomatic signals remain mixed, the ground reality suggests that uncertainty will persist,” said Sugandha Sachdeva, founder of SS WealthStreet.
“Even in the event of de-escalation, restoring damaged infrastructure will take time, keeping supply tight.”
Adding to supply concerns, Kuwait Petroleum Corp reported that its oil tanker Al Salmi, capable of carrying up to 2 million barrels, was struck in an alleged Iranian attack at a Dubai port, raising fears of potential oil spills.
Regional tensions also escalated after Yemen’s Iran-aligned Houthi forces launched missiles toward Israel, heightening concerns over disruptions at the Bab el-Mandeb strait, a critical shipping route linking the Red Sea and Gulf of Aden.
Meanwhile, Saudi Arabia has rerouted crude exports via the Red Sea, with shipments through the Yanbu port rising sharply to 4.658 million barrels per day last week, compared to an average of 770,000 bpd earlier this year.
Analysts warn that with limited spare capacity remaining, the oil market is increasingly vulnerable to prolonged disruptions, which could push prices higher.
In the United States, a preliminary Reuters poll indicated that crude oil inventories, along with distillate and gasoline stocks, likely declined last week.
