Oil Rises as De-escalation Optimism Fades
Oil prices continued their rise on Tuesday (March 24), paring losses after a sharp drop in the previous session, as energy market participants assessed the latest developments related to the Iran war. This rise reflected the return of the risk premium after the de-escalation optimism that had weighed on prices on Monday began to be questioned.
Brent for May delivery traded up 2.4% at $102.31 per barrel, while WTI for May rose nearly 3.6% to $91.27 per barrel. This gain followed a sharp sell-off on Monday, when Brent fell about 11% to around $99 per barrel, after closing above $112 on Friday.
On Monday, remarks by US President Donald Trump briefly pressured oil and pushed stocks higher. However, Tuesday's recovery suggests the market remains skeptical of Trump's claims—which Iran has also denied. "Despite Wall Street's euphoric outlook, oil is far from its lowest point after Tehran denied any weekend negotiations with Washington," said José Torres, senior economist at Interactive Brokers, adding that the risk of a prolonged war remains a major concern.
Torres highlighted that repeated attacks on critical energy infrastructure in the Middle East have fueled concerns about production and transportation disruptions. He believes the numerous attacks on critical energy assets have made the market nervous that capacity and logistics could be disrupted, potentially leading to energy costs remaining higher than at the start of the year, even if a deal is finally reached.
Meanwhile, the Strait of Hormuz—which before the war handled about 20% of global seaborne oil supplies—has become a key flashpoint after Iran nearly halted traffic through the waterway. Iranian state media said on Sunday that Tehran would allow safe transit through the strait, except for vessels linked to its "enemies," stressing that shipping risks remain selective and have not yet fully returned to normal.
Source: newsmaker.id
