Oil prices surged as investors remained skeptical about a breakthrough in US-Iran peace talks. Brent crude futures rose $2.38, or 2.3%, to $104.96 a barrel by 0034 GMT, while U.S. West Texas Intermediate futures increased by $1.73, or 1.8%, to $98.08.
The rise follows a 2% decline on Thursday, marking the lowest closes in nearly two weeks. The uncertainty in peace talks has fueled concerns over Middle East instability and potential supply disruptions in the Strait of Hormuz, a critical passage for global energy supplies.
Satoru Yoshida, a commodity analyst with Rakuten Securities, noted that WTI is expected to remain in a $90-$110 range next week.
“WTI is likely to remain in a $90-$110 range next week, as it has largely done since late March.”
Satoru Yoshida, Commodity Analyst with Rakuten Securities
The ongoing conflict has significantly impacted global oil supply, removing 14 million barrels per day from the market. Full oil flows through the Strait of Hormuz are not anticipated to resume until 2027, even if the conflict ends immediately, according to the head of the UAE's state oil firm ADNOC.
OPEC+ countries are expected to agree on a modest hike in July output during their meeting on June 7, despite ongoing disruptions.
Background
The prolonged conflict and high oil prices continue to raise concerns about inflation and the global economy. Around 20% of global energy supplies transited the Strait before the war, which has removed 14 million barrels per day of oil from the market.
Investors should monitor the upcoming OPEC+ meeting and any developments in US-Iran negotiations for further market implications.
