Crude oil and gasoline prices surged on Tuesday, with June WTI crude closing up 4.19% and June RBOB gasoline up 2.72%. This rally follows President Trump’s comments casting doubt on the ceasefire with Iran, raising concerns about potential escalations that could disrupt the vital Strait of Hormuz. With about 20% of the world’s oil transiting through this chokepoint, any military action could exacerbate existing supply shortages, as Goldman Sachs estimates a 14.5 million bpd reduction in Persian Gulf output due to the ongoing conflict.

The implications for the energy sector are significant. The International Energy Agency has reported that the war has shuttered approximately 14 million bpd of global oil supply, while OPEC+ faces challenges in restoring production levels due to these geopolitical tensions. As local storage reaches capacity, the potential for further price increases looms, especially with the anticipated EIA report suggesting a drop in US crude inventories.

Market participants should closely monitor developments in the Middle East, as any escalation could lead to heightened volatility in energy prices, impacting both crude and gasoline markets significantly.

Source: nasdaq.com