Oil Prices Rise After Threats to Strait of Hormuz

Oil prices continued to rise in early Asian trading on Thursday, reflecting trader expectations of extended disruptions to Middle East supply. Brent crude for July delivery reached $113.09, marking a 2.65% increase, while West Texas Intermediate climbed 2.28% to $109.30.

The front-month Brent contract traded above $121, underscoring tight prompt supply conditions. The surge follows unsuccessful diplomatic attempts to reopen the Strait of Hormuz, coupled with a U.S. military presence in the region. Tehran has limited non-Iranian shipping through the strait since late February, while Washington has intensified efforts to block Iranian-linked vessels.

This has led to what one energy agency described as the largest energy crisis in history.

U.S. crude inventories have continued to decline, adding to the upward price momentum. Separately, Alaska's proved reserves of crude oil and lease condensate increased 5% in 2024, while the nationwide total fell 1%; natural gas reserves in Alaska rose 7%, against a 3% U.S. decline.

OPEC+ is set to announce a modest output increase of around 188,000 barrels per day at its upcoming meeting, according to reports. This follows the announcement that one member country will exit the group effective May 1, though short-term market impacts are expected to be limited due to constraints on additional supply.

China's LNG imports have fallen to a six-year low amid surging prices, and the country may allow higher fuel exports in May as domestic stockpiles grow. Meanwhile, the European Union has warned that the energy crisis stemming from the conflict could persist for years.

President Trump met with oil industry leaders on Tuesday to address market stability, indicating the possibility of a months-long continuation of the conflict. This meeting signaled to markets that no immediate resolution is forthcoming.