Key Highlights
- Brent crude maintains levels near $95 per barrel, while WTI ranges between $88 and $91
- Washington and Tehran are evaluating a two-week truce extension before the April 21 deadline
- The Strait of Hormuz blockade continues, threatening 3.8 million barrels per day of crude flows
- China reported 5% GDP growth year-over-year in Q1, providing modest support for oil demand forecasts
- International Energy Agency and OPEC have both cautioned about weakening oil demand amid ongoing conflict
Crude oil markets have found stability this week as the United States and Iran deliberate over extending their temporary ceasefire by an additional two weeks, providing more runway for diplomatic negotiations that have yet to yield concrete results.
Brent crude continues to trade in the vicinity of $95 per barrel. West Texas Intermediate fluctuates within the $88 to $91 range. Both key benchmarks remain elevated by approximately one-third compared to pre-conflict levels from late February, though they’ve retreated significantly from the $120 peaks witnessed during the initial phase of hostilities.
The current truce between the US and Iranian governments is scheduled to lapse on April 21. Diplomatic meetings conducted in Pakistan over the past weekend failed to produce a breakthrough. Mediators are currently attempting to organize technical-level discussions focused on the most contentious matters, including the reopening of the Strait of Hormuz and Tehran’s nuclear enrichment activities.
Commander Ali Abdollahi of Iran’s joint military headquarters issued a stern warning, stating that if Washington’s blockade persists, Tehran will prohibit all export and import activities through the Persian Gulf, the Sea of Oman, and the Red Sea.
The United States has implemented a naval blockade designed to restrict Iranian maritime traffic. In response, Iran has maintained the strait in a mostly closed state to other shipping vessels. The Strait of Hormuz serves as a critical gateway connecting Persian Gulf oil producers to international markets.
Vivek Dhar, an analyst at Commonwealth Bank of Australia, noted that the blockade jeopardizes approximately 3.8 million barrels of crude oil and refined products that transited through the chokepoint last month.
Disconnect Between Futures and Physical Markets
Kaes Van’t Hof, chief executive of Diamondback Energy, observed that oil futures markets aren’t accurately capturing developments in the physical crude market. He suggested that futures contracts are increasingly factoring in de-escalation scenarios rather than reflecting actual conditions.
Warren Patterson, commodities strategist at ING Groep, shared a similar assessment, noting that any ceasefire agreement is likely to remain fragile given the substantial gap between American and Iranian positions, which creates significant upward price risk.
Both the International Energy Agency and the Organization of the Petroleum Exporting Countries issued warnings this week that the ongoing conflict is dampening global oil demand.
Chinese Economic Data Provides Limited Support
China’s economy expanded by 5% on a year-over-year basis during the first quarter of 2026, reaching the top end of Beijing’s annual growth target. The figure exceeded analyst expectations and provided some optimism regarding oil demand from the world’s top crude importing nation.
Nevertheless, economic growth decelerated as the quarter progressed. China sources a significant portion of its crude imports from Iran, introducing additional uncertainty into its energy security outlook.
In related developments, Thailand is pursuing emergency procurement arrangements for oil and fertilizer supplies via Oman. Meanwhile, a fire at Viva Energy’s Geelong refinery in Australia is reducing domestic fuel production capacity. India has issued warnings that the economic repercussions of the conflict could rival those experienced during the pandemic era.
US President Donald Trump indicated this week that a resolution to the conflict may be imminent, suggesting that additional negotiations could commence within days.
