Oil Prices Pull Back After U.S. Naval Update
Oil prices trimmed earlier gains on Monday after the U.S. military confirmed that two Navy guided-missile destroyers had entered the Gulf to counter an Iranian blockade. The U.S. also stated that two vessels successfully passed through the Strait of Hormuz.
Earlier reports from Iran had claimed that a U.S. warship was prevented from entering the Gulf.
Volatility Driven by Conflicting Reports
Brent Crude Oil rose $2.05, or 1.9%, to $110.22 per barrel by 13:07 GMT, after previously reaching a session high of $114.30. Meanwhile, WTI Crude Oil gained 0.5% to $102.41, having earlier climbed as high as $107.46.
Prices initially surged after Iranian media reported that Tehran had struck a U.S. warship attempting to cross the strait. However, United States Central Command denied that any U.S. Navy ships were hit.
Supply Risks Keep Oil Prices Elevated
Despite the pullback, analysts suggest that oil prices remain supported by ongoing supply concerns. UBS analyst Giovanni Staunovo noted that the outlook for crude remains tilted to the upside as long as shipping disruptions in the Strait of Hormuz persist.
Geopolitical Tensions Remain High
Donald Trump stated that the U.S. would take steps to assist vessels stranded in the strait. However, with no resolution in sight and shipping activity still restricted, oil prices have remained above $100 per barrel.
Iran has also warned U.S. forces against entering the strait, signaling it would respond strongly to any perceived threats. At the same time, diplomatic efforts remain stalled, as Tehran has indicated it will delay nuclear negotiations until after the conflict and the lifting of shipping restrictions.
Additional Regional Developments
In a separate development, the United Arab Emirates accused Iran of targeting an empty crude oil tanker owned by ADNOC using drones while it attempted to pass through the strait.
OPEC+ Output Increase Limited by Conflict
Meanwhile, OPEC+ announced plans to increase oil production by 188,000 barrels per day in June for seven member countries. This marks the third consecutive monthly increase.
However, much of this additional supply may not reach the market, as ongoing conflict continues to disrupt oil flows in the Gulf region.
Market Outlook
Overall, oil markets remain highly sensitive to geopolitical developments in the Middle East. While supply concerns continue to support prices, volatility is likely to persist as new updates emerge from the region.
