Crude oil prices surged on Monday, with June WTI closing up 3.07% and reaching a three-week high, while June RBOB gasoline hit a nearly four-year peak. This rally was driven by escalating geopolitical tensions surrounding the US-Iran conflict, which has effectively closed the Strait of Hormuz and tightened global oil supplies. However, prices dipped in post-market trading after President Trump announced the cancellation of a planned military strike against Iran, raising questions about the future of peace negotiations.

The implications for the energy sector are significant, as Goldman Sachs estimates that crude output in the Persian Gulf has been curtailed by approximately 14.5 million barrels per day. The ongoing conflict has led to a drawdown of nearly 500 million barrels from global stockpiles, with potential to reach a billion barrels by June. Additionally, the International Energy Agency warned that the market will remain “severely undersupplied” until October, even if hostilities cease.

Market professionals should watch for continued volatility in oil prices as geopolitical developments unfold. The combination of reduced supply from the Middle East and the potential for further OPEC production cuts could sustain upward pressure on crude prices in the near term.

Source: nasdaq.com