Washington [US], April 7: Oil prices are climbing again as traders weigh the prospect of a prolonged conflict between the United States, Israel and Iran, with analysts warning that crude could rise far beyond current levels if ceasefire efforts fail.
Brent crude rose 2.01 percent on Monday to $111.23 a barrel, while U.S. benchmark West Texas Intermediate gained 3.53 percent to $115.48. Murban crude traded near $117.
The gains followed an even sharper surge a day earlier, when WTI jumped more than 11 percent and Brent nearly 8 percent before retreating, underscoring how rapidly sentiment is shifting as investors respond to each new military development.
Markets are now caught between two competing forces: the risk of further escalation and the possibility that diplomacy could still contain the conflict.
But as ceasefire talks remain uncertain, expectations for how high oil could go are steadily moving upward.
Fresh strikes by Israel and the United States on targets inside Iran, including the South Pars gas field, have intensified fears of a broader disruption to energy supplies.
Iran has responded with missile attacks, keeping investors focused on the Strait of Hormuz, the narrow waterway through which roughly a fifth of the world's oil supply passes.
President Donald Trump has warned that the conflict could escalate further if Iran does not reopen the strait, heightening fears of prolonged disruption to global trade flows.
At the same time, mediators from Egypt, Pakistan and Turkey have proposed a 45-day ceasefire. Neither Washington nor Tehran has publicly responded.
Analysts say the longer the conflict drags on without a diplomatic breakthrough, the higher the likely ceiling for oil prices.
"The longer this continues, the more the impact on oil prices," said Anindya Banerjee, head of currency and commodity research at Kotak Securities. "Every passing week is crucial." Several analysts now see oil moving into a range of $120 to $130 a barrel in the near term if tensions persist. If disruptions to shipping through the Strait of Hormuz deepen, some believe prices could climb above $150.
Others warn that in a prolonged conflict scenario, further spikes cannot be ruled out.
Estimates suggest that a major disruption could affect 8 to 10 percent of global oil supply and 15 to 20 percent of natural gas supply, leaving markets extremely sensitive to any sign of escalation.
Tightening supply is already becoming visible in the structure of the oil market.
Spot crude is trading at a premium of $20 to $30 a barrel over futures contracts, a sign that buyers are willing to pay significantly more for immediate deliveries than for oil arriving later.
That pattern typically signals a market concerned less about long-term demand and more about near-term shortages.
OPEC+ has agreed to raise output by 206,000 barrels a day from May, but analysts say that increase is unlikely to offset the scale of the risks if the conflict worsens.
The producer group still has room to adjust policy, including pausing or reversing planned increases should conditions deteriorate further.
Oil prices have already risen sharply since the conflict began five weeks ago.
U.S. crude has climbed more than 60 percent, while Brent is up nearly 50 percent.
The surge is feeding into broader concerns across the global economy, including higher inflation, tighter financial conditions and weaker growth if elevated prices persist.
Governments are already moving to reduce supply risks.
Japan has started releasing strategic petroleum reserves and exploring alternative shipping routes, while South Korea is deploying additional vessels to secure oil shipments from Saudi Arabia.
For investors, oil is increasingly trading less on traditional supply-and-demand fundamentals and more on geopolitical risk.
"A ceasefire could stabilize prices quickly," said Jay Woods, chief global strategist at Freedom Capital Markets. "Without one, the ceiling keeps rising."
Source: Qatar Tribune
