Oil rises on Iran war stalemate; near-term potential for further gains seen limited

Oil prices climbed more than two dollars on Monday due to investor anxiety over the ongoing Iran war and President Donald Trump's demands for Iran's surrender. Brent crude futures rose 2.65 percent to $90.87 a barrel, while U.S. West Texas Intermediate crude futures increased 2.55 percent to $84.50 a barrel. Trump stated the U.S. would not extend the memorandum of understanding with Iran and that Iran would not make a deal he deemed necessary; he added that if Oman interfered, the U.S. would bomb them severely.

A senior Iranian official warned Tehran would escalate tensions in the Strait of Hormuz and beyond, potentially launching an attack if the U.S. fails to implement an interim peace deal fully within weeks. However, oil prices are not expected to surge substantially higher unless the flow of crude through the Strait of Hormuz stops at night or the Bab el-Mandeb Strait closes, according to Bjarne Schieldrop at SEB Research.

Analysts suggest that as long as there are no new catalysts, oil prices may continue to stabilize around current levels.