Crude Prices Jump as US-Iran War at a Standstill

Crude oil and gasoline prices surged to 3-week highs on Monday, driven by concerns that the US-Iran war will continue to limit Middle East oil supplies. US Energy Secretary Chris Wright's remarks that the US is playing the long game with Iran fueled the rally, as it implied no plans for de-escalation of the conflict. Israeli attacks on Iran-backed Hezbollah in Lebanon and Iran-backed Hamas in Gaza further dampened hopes for an end to hostilities in the region.

Additionally, Iran and Oman reportedly nearing a deal to reopen the Strait of Hormuz added support to crude prices.

However, crude prices faced some pressure due to the possibility that larger-than-expected volumes of crude oil are moving out of the Persian Gulf despite tensions between the US and Iran. This was supported by vessel-tracking data showing that the UAE, Qatar, Iraq, and Kuwait have been shipping crude oil via "dark" transits, with the UAE alone accounting for 9 million barrels per day (mbpd) over the past week.

The economic measures announced by the US Treasury Secretary last Friday, aimed at Iran, also added to the support for crude prices. Treasury Secretary Bessent hinted at unprecedented measures against Iran, further bolstering the bullish sentiment in the market. Despite these factors, there remains no sign of progress toward a full reopening of the Strait of Hormuz, with the Iranian military spokesperson asserting that no ship can safely pass without Iran's authorization.