Oil rises in choppy trade; US, Iran rhetoric heats up

Published Tue, Apr 7, 2026 · 05:56 AM

[HOUSTON] Oil prices climbed in choppy trade on Monday, as the US and Iran ratcheted up their rhetoric even as the two countries are engaging in indirect talks that could lead to the de-escalation of hostilities.

Brent crude futures settled at US$109.77 a barrel, up 74 cents, or 0.68 per cent. US West Texas Intermediate crude futures settled at US$112.40, up 87 cents or 0.78 per cent.

For prices to decline to less exorbitant levels, any cessation of attacks would need to come with an agreement to open the crucial Strait of Hormuz, the shipping artery used by one-fifth of the world’s oil and gas supply.

Major oil consumers, particularly in Asia, are conserving barrels or cutting consumption in response to the closure of the strait. The US and Iran received a framework from Pakistan to end hostilities, but Iran rejected the idea of immediately reopening the strait after President Donald Trump threatened to rain “hell” on the nation if it did not make a deal by the end of Tuesday.

The strait, which carries oil and petroleum products from Iraq, Saudi Arabia, Qatar, Kuwait and the United Arab Emirates, remains largely closed due to Iranian attacks on shipping after the US-Israel attacks began on Feb 28.

Some vessels, however, including an Omani-operated tanker, a French-owned container ship and a Japanese-owned gas carrier, have passed through the strait since Thursday, shipping data showed, reflecting Iran’s policy to allow passage for vessels from countries it deems friendly.

“The market is trying to realise what to expect going forward. The most important headline this weekend has been that some ships passed through the strait,” said SEB Research analyst Ole Hvalbye.

Hvalbye also highlighted that Europe continued to lose physical barrels and products to Asia due to the market tightening. Iran said it had formulated its positions and demands in response to recent ceasefire proposals conveyed via intermediaries.

“It’s a very fluid situation with peace plans being put out there,” said John Kilduff, a partner with Again Capital. “The rhetoric out of Iran seems to reject a ceasefire proposal, but they are allowing more ships through the Strait of Hormuz.”

Monday’s price moves followed an 11 per cent surge for WTI and an 8 per cent rise for Brent during the previous trading session on Thursday, the biggest absolute price increase since 2020.

Seeking alternative sources

The Middle East supply disruptions have led to refiners seeking alternative sources for crude, particularly for physical cargoes in the US and Britain’s North Sea. Spot premiums for US WTI crude have jumped to all-time highs on competition between Asian and European refiners.

Indian refiners have also postponed maintenance shutdowns of their units to meet local fuel demand.

On Sunday, Opec+, consisting of some members of the Organization of the Petroleum Exporting Countries and allies such as Russia, agreed to a modest rise of 206,000 barrels per day for May.

“Opec movements look to be challenged based on export availability,” said Rystad analyst Janiv Shah.

Saudi Arabia also set the official selling price of May Arab Light crude oil to Asia at a record premium of US$19.50 a barrel above the Oman/Dubai average, an increase of US$17 from the previous month, Aramco said.

Russian supply has been disrupted recently by Ukrainian drone attacks on its Baltic Sea export terminals. Media reports on Sunday said its Ust-Luga terminal resumed loadings on Saturday after days of disruptions.

Exports from the Black Sea port of Tuapse are set to rise to 794,000 metric tons in April, up 8.7 per cent on a daily basis from 755,000 metric tons planned for March, according to two traders and Reuters calculations. REUTERS