Khaberni - Oil prices rose more than one percent on Wednesday, with Brent futures continuing their gains after the record monthly increase recorded in March amid ongoing market concerns due to the volatility of the situation in the Middle East despite reports that the US-Israeli war on Iran may be about to end.
Brent contract for June rose $1.40, or 1.4 percent, to $105.37 a barrel at 04:30 GMT. Brent recorded a record monthly gain of 64 percent in March, according to data from the London Stock Exchange group dating back to June 1988.
Meanwhile, West Texas Intermediate crude futures for May rose $1.59, or 1.6 percent, to $102.97 a barrel.
Prices recouped some of the losses they incurred on Tuesday, when Brent futures for June delivery fell more than three dollars at settlement following unconfirmed media reports that the Iranian president is ready to end the war.
US President Donald Trump told reporters on Tuesday that the United States could end the military campaign within two to three weeks, and that Iran is not obligated to reach an agreement to end the conflict, in his clearest statement yet that he wants to end the ongoing war for a month.
However, analysts say that even if the conflict ends, the damage to the infrastructure is likely to cause continued supply shortages.
Priyanka Sachdeva, senior market analyst at Phillip Nova, said oil prices will depend on how quickly supply chains return to normal thereafter.
She added "Even if the conflict starts to recede, the flow of tankers will not resume immediately... Shipping costs, insurance, and tanker movement will take time to return to normal," noting that the actual damage to the oil infrastructure can only be assessed after that.
A report published by the Wall Street Journal quoted Trump as saying that he might end the war before reopening the Strait of Hormuz, a major route through which 20 percent of the global oil and liquefied natural gas trade passes.
Analysts at the London Stock Exchange group noted in a memo, "Even with the continued activity of diplomatic channels, as reported, and sporadic statements from the US administration predicting a quick end to the conflict, a combination of limited tangible diplomatic progress and ongoing maritime attacks and explicit threats to energy assets keeps supply risks tilted upwards."
A Reuters survey yesterday showed that OPEC oil production dropped by 7.3 million barrels per day in March from the previous month, illustrating the impact of forced export cuts due to the strait's closure.
Meanwhile, data from the US Energy Information Administration yesterday showed that US crude oil production recorded its largest drop in two years in January following a severe winter storm that halted production in large areas of the United States.
