Oil Prices Rise Amid US-Iran Tensions in Strait of Hormuz as Ceasefire Nears End

Oil prices rose sharply on Monday amid escalating tensions between the US and Iran in the Strait of Hormuz, with attacks on commercial vessels and a fragile ceasefire set to expire soon. West Texas Intermediate futures increased about 6% to $88.99 per barrel, while Brent crude jumped 5.7%.

The gains followed US Navy actions against an Iranian container ship in the Gulf of Oman and Iran's Revolutionary Guard firing on a tanker in the strait.

The US seized an Iran-flagged cargo ship, as stated by President Donald Trump. Iran reversed its earlier reopening of the strait, leading to a virtual standstill in shipping traffic, with only three crossings in 12 hours on Monday, according to shipping data from SynMax and Kpler.

More than 20 vessels crossed on Saturday, the highest since early March, but traffic halted again after Iran reimposed controls. International law expert Marc Weller described the US seizure as a “warlike measure” that could undermine the ceasefire.

A container ship in the strait was hit by an unknown projectile on Saturday, and Iran's actions came after it announced the strait was open to commercial traffic on Friday.

Research reported that global onshore oil inventories are plummeting at an unprecedented pace due to the two-month conflict, with refinery outages exceeding 5 million barrels per day. The firm estimated cumulative oil store losses at around 1 billion barrels from the strait's closure, potentially swelling to 1.98 billion by June's end.

Even with a peace deal, restoring supplies could take months, including 30-40 days for transport and offloading, plus 20 days for tankers to return. Societe Generale analysts stated that OPEC oil production may not normalize for nine months, and demand could take six months to recover post-conflict.

“The oil market breaking point is here. Global onshore oil inventories are going to plummet, and the decline will be at a pace no one has ever seen before." — HFI Research, Sunday (Insider). Current global oil supply shortages range from 11 million to 13 million barrels per day, necessitating demand destruction comparable to COVID-19 lockdowns, according to HFI. US commercial oil stores may drop to around 400 million barrels, just above the operational minimum of 380 million.”

Street slid and stocks dipped in early Monday trading, while European equity futures fell 1.2%. Bitcoin traded at $74,335, down 1.6%, amid renewed war risks. Peace talks between the US and Iran are scheduled for a second round in Islamabad, though uncertainty persists.

China's Xi Jinping stated in a call to the Saudi crown prince that the Strait of Hormuz should be open. Senior Iranian politician Ebrahim Azizi told the BBC that Tehran will never cede control of the strait and will decide rights of passage. The UAE has opened talks with the US about a financial backstop if the conflict deepens, according to US officials.

Former hostage negotiator Roger Carstens warned that Iran could use detained Americans as a sweetener in nuclear talks.

Electric vehicle registrations in continental Europe surged 51% in March, with 224,000 new EVs sold across 15 countries, according to New AutoMotive and E-Mobility Europe. This represented 22% of total car sales in key markets. Norway led with 98.4% EV market share, registering 17,406 models.

Germany saw 70,427 registrations, boosted by a €3 billion incentive program offering up to €6,000 per vehicle for qualifying households.

“March's surge in electric car sales is one of Europe's biggest recent gains in energy security, in a month when oil dependence has become a real vulnerability." — Chris Heron, Secretary-General of E-Mobility Europe (GB News). The UK registered 86,120 new EVs, a 24.2% year-on-year increase, accounting for 22.4% of the market. Used EV sales in the US rose 20% in the first quarter. India saw an 87% jump in EV purchases year-on-year in March. Analysts attribute the growth to rising gasoline prices driven by the Iran conflict.”

Kpler said the US is "back to square one" in the Strait of Hormuz impasse. The April 22 deadline for a US-Iran deal approaches, with the ceasefire's fragility heightening risks. Pakistan is pushing to remain involved in peace efforts despite the first round yielding no agreement.