Oil prices surged by approximately 5%, rebounding above $106 per barrel on Thursday following US President Donald Trump’s address to the nation, which reignited concerns regarding escalating tensions in the Middle East. This development comes after a brief period of optimism for de-escalation that had momentarily tempered the rally, causing prices to dip below $100 per barrel. Brent crude futures experienced a significant increase of nearly 5%, reaching a trading price of $106 per barrel. WTI Crude, meanwhile, experienced an increase of over 4% to $104 per barrel in the early morning hours of Thursday. In March, oil prices surpassed the significant $100 threshold following the closure of the Strait of Hormuz, representing the first occurrence since Russia’s invasion of Ukraine in 2022. In March, front-month Brent futures achieved a remarkable monthly gain of 64%, according to data that extends back to June 1988, as reported. Trump stated that US forces will ‘finish the job’ in Iran soon as “core strategic objectives are nearing completion.” He remarked “We’re now totally independent of the Middle East, and yet we are there to help.” He added “We don’t have to be there. We do not require their oil. We do not require any of their offerings. However, we are present to assist our allies.”

He reiterated his assertion that Iran’s “navy is gone, their air force is in ruins” and that the leaders in Tehran are all deceased. He asserted that joint strikes had “obliterated” the Islamic Republic’s nuclear program, and “if we see them make a move, even a move for it, we will hit them with missiles very hard again.” The US President asserted that Iran’s capacity to deploy missiles and drones has been diminished. His comments suggesting that the US might attempt to wrap up the war within the next two to three weeks may have spurred investor concerns regarding increased attacks on Iranian power and crude facilities, unless a deal is reached, stated Garima Kapoor. “The emphasis of the United States has shifted from regime change and the opening of Hormuz. We believe that as the escalation between the US and Iran concludes, the cost of insuring vessels transiting through Hormuz will decrease, facilitating a gradual resumption of energy movement in the region,” she added. “Uncertainty will prevail in the near term with crude oil prices remaining firm, even as hopes have been offered for closure or war within the next 2 to 3 weeks.”

Currently, Iran appears resilient against American pressure; however, the United States’ degrees of freedom are diminishing, indicating a constrained capacity for prolonged engagement. We anticipate an imminent conclusion to the conflict. “Heightened volatility is likely to persist in the short term,” she further stated. Even if the conflict subsides in the short term, oil prices are unlikely to decrease in the near future. Ambit Institutional Equities, in its recent report, stated that even if geopolitical tensions subside, oil prices are likely to remain elevated, with $80 becoming the new normal for Brent as a result of infrastructure damage, geopolitical risk premiums, and inventory restocking.