Oil jumps again: peace talks stall as Hormuz bottleneck keeps supply tight
Brent rose above $107 a barrel as limited traffic through the Strait of Hormuz kept supplies tight, while analysts warned prolonged disruption could deepen deficits and hit demand.
Oil prices extended gains on Monday, rising almost 2% as peace efforts between the United States and Iran lost momentum and shipping through the Strait of Hormuz remained constrained, tightening global supply.
According to Reuters, Brent crude rose $2.16 (2.05%) to $107.49 a barrel by 11.46pm GMT, its highest level since April 7, while US West Texas Intermediate (WTI) climbed $1.77 (1.88%) to $96.17.
The rise followed sharp weekly gains, with Brent and WTI up nearly 17% and 13% last week respectively—marking their biggest weekly increases since the war began.
Hopes of reviving diplomacy faded over the weekend after US President Donald Trump scrapped a planned trip by envoys Steve Witkoff and Jared Kushner to Islamabad, even as Iranian Foreign Minister Abbas Araqchi arrived in Pakistan.
“This move puts the ball squarely back in Iran’s court, and the clock is now ticking loudly,” IG market analyst Tony Sycamore said in a note, warning Tehran could be forced to shut output at ageing oilfields if it runs out of storage capacity.
Tehran has largely restricted the strait while Washington has imposed a blockade of Iran’s ports. Traffic through Hormuz stayed thin, with shipping data from Kpler showing just one oil products tanker entering the Gulf on Sunday.
Goldman Sachs raised its fourth-quarter oil price forecasts to $90 a barrel for Brent and $83 for WTI, citing reduced Middle East output.
“The economic risks are larger than our crude base case alone suggests because of the net upside risks to oil prices, unusually high refined product prices, products shortages risks, and the unprecedented scale of the shock,” Goldman analysts led by Daan Struyven wrote in an April 26 note.
The bank’s updated view assumes Gulf exports through Hormuz normalise by end-June, later than its previous assumption of mid-May, and it expects a slower recovery in Gulf production.
Goldman estimates 14.5 million barrels per day of Middle East crude production losses are driving an unprecedented global inventory draw of 11-12 million bpd in April. It expects the oil market to swing from a 1.8 million bpd surplus in 2025 to a 9.6 million bpd deficit in Q2 2026.
Global oil demand is expected to fall by 1.7 million bpd in Q2, and by 100,000 bpd in 2026 year-on-year, as refined product prices surge.
“Because extreme inventory draws are not sustainable, even sharper demand losses could be required if the supply shock persists longer,” the analysts said.
Source: Reuters
