Escalating conflict involving Iran is driving up global oil prices, with analysts predicting a potential rise to $200 per barrel amid supply concerns.
Oil Prices Climb Amid Iran Conflict Fears
Oil prices are rising in the U.S. as investors fear a prolonged war between Israel, the U.S., and Iran, potentially leading to increased inflationary pressures.
West Texas Intermediate crude oil for May delivery is up 1% to $95.38 USD on the NYMEX in New York. Brent crude for May delivery on ICE is up 1.69% to $109.79 USD per barrel.
Record Brent Price Increase in March
Brent crude saw a record 49% increase in March, with costs of petroleum products – from diesel to jet fuel – rising even more, impacting businesses and consumers. These increases have sparked concerns about simultaneous global inflation and economic slowdown.
Trump Delays Iran Strike, Claims Progress in Talks
U.S. President Donald Trump announced on Thursday a 10-day delay of attacks on Iranian power plants, until Monday, April 6th. He had previously threatened to destroy Iranian power plants if Tehran did not unblock the Strait of Hormuz within 48 hours, extending the ultimatum by five days on March 23rd.
Trump added that, despite “false reports from fake news media,” talks with Iran are “going very well.” However, Iranian media reports that Iran rejects the U.S. proposal as “unilateral and unjust.”
Israeli Strikes on Iran, Potential Troop Deployment
The Israeli military conducted “extensive” airstrikes on Tehran overnight from Thursday to Friday. Iranian media reported U.S.-Israeli strikes on the cities of Kom and Urmia, resulting in at least six deaths. The month-long war continues to escalate, extending to territories of Gulf states.
The Wall Street Journal reports that the Pentagon is considering sending an additional 10,000 troops to the Middle East, while Trump considered using ground forces for an amphibious assault on the strategic Iranian oil hub, Kharg Island.
De-escalation Efforts and Market Concerns
CNN reported that the Trump administration is attempting to organize a meeting between Vice President J.D. Vance and Pakistani officials this weekend to discuss a potential end to the war with Iran, citing two U.S. officials. Other high-ranking administration officials may also participate.
Lisa Cook of the Federal Reserve assessed that the sharp rise in oil prices has shifted the risk balance, making inflation a greater concern than employment.
“Despite talk of de-escalation, the oil price is pricing in a protracted war, not just headlines. Any direct damage to oil infrastructure or escalation could force markets to price in a rapid increase,” said Priyanka Sachdeva, an analyst at Phillip Nova.
Global Oil Supply Disrupted
The war has reduced global oil supplies by 11 million barrels per day, and the International Energy Agency has described the crisis as worse than the two oil shocks of the 1970s and the Russia-Ukraine gas war combined.
Analysts at Macquarie Group estimate that prices could rise to $200 if the war continues until the end of June.
“With each day, market pressure is building. Asian countries are tapping into buffer stocks and considering demand adjustments,” said Mukesh Sahdev, founder and CEO of Australian consulting firm XAnalysts.