American crude oil WTI touched a 5% increase while Brent strengthened by almost 4% as investor anxiety peaks over war developments. Brent crude oil futures contracts are trading near $112 per barrel in Tuesday’s (28/04) sessions, extending their gains for a seventh consecutive session and reaching their highest level in about a month, following the deadlock in negotiations to end the war in Iran.
Read: Oil price jump: Brent above $108 after peace talks freeze
What drove the surge in oil prices
The actual price of physical Brent crude oil has exceeded $150 per barrel for some buyers, due to serious supply shortages. There is a significant gap of $30-50 per barrel between physical prices and futures contract prices. Meanwhile, American crude contracts are trading at prices above $100-101 per barrel.
Investors are anxious about US President Trump’s response to Iran’s latest proposal to end the conflict and reopen the Strait of Hormuz. However, reports suggest that Trump is dissatisfied with the offer, as Tehran’s nuclear program remains a key friction point in negotiations. Although a ceasefire has largely held since early April, moves by Iran and the US have disrupted shipping through the Strait of Hormuz, heightening concerns about disruptions to oil, LNG supplies, and a range of raw materials produced by Gulf countries.
In the ninth week of war, energy prices are moving on a steep upward trajectory, reinforcing fears about the future. Furthermore, the International Energy Agency has warned of a potentially unprecedented supply shock, alongside growing risks of global demand slowdown.
