Oil prices surged at the start of the last week of April, driven by escalating tensions in the Middle East, with Brent crude trading above $100 per barrel and the June contract nearing $108. The market is reacting to stalled peace negotiations between the U.S. and Iran, as talks ended without an agreement, raising concerns about supply disruptions. The August contract is also approaching local peaks, indicating a bullish sentiment among traders.
The implications for the oil market are significant. The ongoing geopolitical instability, particularly around the Strait of Hormuz, is keeping prices elevated, with Goldman Sachs recently raising its oil price forecast to $90 for Q4 2026. The futures market reflects a tight supply-demand balance, and current backwardation suggests traders expect prices to remain high in the near term. However, uncertainty looms, with analysts estimating a less than 33% chance of a lasting peace between the U.S. and Iran by the end of May.
Market professionals should closely monitor developments in the region, as any resolution could lead to a swift price correction of 10-20%. Conversely, sustained tensions may push prices further upward, particularly in deferred contracts, making it crucial to stay attuned to geopolitical shifts and their impact on oil supply dynamics.
Source: xtb.com