OPEC+

Brent oil prices surged sharply on Thursday, rising as much as 7 percent amid escalating geopolitical tensions between the United States and Iran. The rally follows reports that Donald Trump is considering potential military action to break the deadlock in negotiations, raising fears of further disruptions to already strained Middle East oil supplies. Oil Markets Rally on War Fears In early trading, Brent oil prices for June delivery jumped by $6.81, or 5.8 percent, reaching $124.84 per barrel. This marked the ninth consecutive session of gains for the expiring contract. Meanwhile, the more actively traded July contract climbed to $113.78, gaining 3 percent after a strong rise in the previous session. At the same time, US benchmark West Texas Intermediate (WTI) also recorded gains. June futures rose by $2.76, or 2.6 percent, to $109.64 per barrel. The contract has now increased in eight of the last nine sessions, reflecting sustained bullish momentum across global oil markets. Geopolitical Tensions Drive Supply Concerns The sharp rise in Brent oil prices comes amid deepening conflict in the Middle East. According to reports, the United States is weighing military options to pressure Iran into negotiations over its nuclear programme. The conflict escalated after joint US-Israel air strikes began earlier this year, prompting Iran to retaliate by restricting shipping through the critical Strait of Hormuz. This narrow passage is one of the world’s most important energy chokepoints. A disruption here can significantly impact global oil flows. Analysts warn that prolonged closure or restricted access could tighten supply further, pushing prices even higher. Energy Markets Face Historic Disruption The ongoing conflict has already triggered what experts describe as one of the largest energy disruptions in modern history. Thousands have died, and regional infrastructure has suffered severe damage. Despite a temporary ceasefire, tensions remain high, with the US maintaining pressure through sanctions and a blockade on Iranian ports. Market analysts believe that the prospects for a near-term resolution remain slim. Continued uncertainty surrounding the reopening of the Strait of Hormuz is keeping traders on edge, driving speculative buying in oil markets. OPEC+ and UAE Exit Add to Market Uncertainty Beyond geopolitical risks, structural shifts within OPEC+ are also influencing Brent oil prices. The recent decision by the United Arab Emirates to exit the alliance, effective May 1, has raised concerns about the group’s ability to manage global oil supply. OPEC+ is expected to discuss a modest production increase of around 188,000 barrels per day in its upcoming meeting. However, analysts believe this adjustment will have limited impact given the scale of supply disruptions caused by the conflict. Demand Destruction Emerges as Key Risk With supply tightening and prices rising rapidly, analysts are now focusing on demand destruction as a possible balancing mechanism. Experts estimate that high prices could reduce global oil demand by approximately 1.6 million barrels per day as consumers cut back on fuel usage. However, this reduction may not be sufficient to offset the current supply shortfall. As a result, Brent oil prices could remain elevated in the near term, especially if geopolitical tensions continue to escalate. Both Brent and WTI benchmarks are now on track for their fourth consecutive monthly gains. Since the start of the year, Brent crude has more than doubled, reaching its highest level since March 2022. WTI has also surged by over 90 percent during the same period.