Oil markets experienced a sharp rebound on Tuesday as geopolitical tensions resurfaced following Iran’s denial of reported diplomatic talks with the United States, contradicting earlier statements from Washington and reigniting concerns over prolonged supply disruptions in the critical Strait of Hormuz.
Brent crude futures rose $2.89, or 2.9%, to $102.83 per barrel, while U.S. West Texas Intermediate (WTI) climbed $2.49, or 2.8%, to $90.62. This recovery followed Monday’s steep 10% decline, which occurred after U.S. President Donald Trump announced a five-day delay to planned attacks on Iranian power plants, citing progress in discussions with unnamed Iranian officials.
Iran swiftly rejected any contact with Washington, with Tehran dismissing the claims as “an attempt to manipulate financial markets.” The Iranian Revolutionary Guards further escalated rhetoric, stating they had attacked U.S. targets and denouncing Trump’s comments as “worn-out psychological operations.” This contradictory narrative between the two nations has injected fresh uncertainty into energy markets already grappling with the Strait of Hormuz blockade that has halted approximately one-fifth of global oil and liquefied natural gas shipments.
“Today’s moderate bounce is just the market finding its footing in the mud,” said KCM Trade chief market analyst Tim Waterer. “Traders are aware that while the missiles are on hold, the Strait of Hormuz is still far from a clear waterway.” Despite the blockade, two tankers bound for India successfully navigated the strait on Monday, offering a glimmer of hope for supply chain normalization.
Analysts remain cautious about the near-term outlook. Macquarie noted in a client report that even with potential de-escalation, they expect a price floor of $85-$90 with a “natural drift back to the $110 range until the Strait of Hormuz is restored.” The firm warned that if the strait remains effectively closed until late April, Brent crude could surge to $150 per barrel.
The conflict’s ripple effects continued with new attacks on energy infrastructure across the region. Iranian media reported strikes on a gas company office and pressure-reduction station in Isfahan, along with a projectile hitting a gas pipeline feeding a power station in Khorramshahr. These developments underscore the persistent volatility in the region.
In response to supply constraints, the U.S. temporarily waived sanctions on Russian and Iranian oil already at sea, while the International Energy Agency is consulting governments about potential additional releases from strategic reserves. Meanwhile, industry sources indicate traders have offered Iranian crude to Indian refiners at premiums to ICE Brent benchmarks.
“Markets are bracing for disruption at least until April, which continues to provide tailwinds for Brent while maintaining inflationary pressures,” said Priyanka Sachdeva, senior market analyst at Phillip Nova. The longer-term economic implications were highlighted at a Houston energy conference, where executives and ministers warned of the U.S.-Israel conflict with Iran’s enduring impact on global energy security, even as U.S. Energy Secretary Chris Wright sought to downplay the crisis severity.
Source: ARY News