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

Oil prices climbed nearly $2 on Monday due to global supply concerns stemming from investor doubts about efforts to end the Iran war. U.S. President Donald Trump demanded Iran's surrender and threatened to bomb Oman. Brent crude futures rose $2.35, or 2.65%, to $90.87 a barrel, while U.S. West Texas Intermediate crude futures increased $2.10, or 2.55%, to $84.50 a barrel. Trump stated the U.S. was not seeking an extension of the memorandum of understanding with Iran and that Iran would not make a deal he deemed necessary.

Iran vowed to intensify tensions in the Strait of Hormuz and beyond, threatening an attack if the U.S. fails to fully implement an interim peace deal in weeks. However, oil prices are expected to remain relatively stable unless there is a halt in crude exports through the strait at night or a closure of the Bab el-Mandeb Strait.

U.S. Energy Secretary Chris Wright believes Trump has the opportunity to wait out Iran while economic sanctions and an oil embargo pressure them. The absence of new triggers may result in oil prices consolidating around current levels.