Crude oil prices surged on Friday, with June WTI closing up 4.20% at a 1.5-week high, driven by ongoing tensions in the Middle East. The closure of the Strait of Hormuz, a critical transit route for global oil, remains a significant concern as the U.S. and Iran continue to reject peace proposals, exacerbating supply constraints. Goldman Sachs estimates that the conflict has curtailed approximately 14.5 million barrels per day of crude output in the Persian Gulf, contributing to a steep decline in global inventories.

The International Energy Agency (IEA) reported a severe undersupply in the oil market, projecting that global oil inventories could decrease by nearly a billion barrels by June. Meanwhile, OPEC’s plans to increase production face challenges as Middle Eastern producers are forced to cut output due to the ongoing war, further tightening supply dynamics.

Market professionals should prepare for continued volatility in energy prices, as geopolitical tensions and supply disruptions are likely to persist, influencing trading strategies and portfolio allocations in the energy sector.

Source: nasdaq.com