Oil prices extend gains after record monthly rally on Iran war

Oil prices extended recent gains as traders weighed escalating attacks in the Persian Gulf and supply concerns tied to the Iran conflict; Brent front‑month contracts were trading around $104.63 for June delivery.

Market data underlines the scale of the move: LSEG data showed Brent front‑month futures posted a 64% monthly gain in March — a record in the available series — while U.S. West Texas Intermediate (WTI) front‑month May contracts were near $102.34 and June WTI around $93.62. A Reuters survey also indicated OPEC output fell by roughly 7.3 million barrels per day in March versus the prior month, reflecting forced export cuts amid disruptions to shipments through the Strait of Hormuz.

The price action has been amplified by thinner market liquidity and a growing geopolitical premium as maritime attacks and threats to energy infrastructure keep upside supply risks prominent. Traders said intermittent reports of diplomatic contact and U.S. commentary about a possible short end to the military campaign temporarily eased some losses, but the underlying fear of sustained supply tightness has supported prices.

In broader economic terms, the situation highlights energy security vulnerabilities: the Strait of Hormuz transits about 20% of global oil and LNG trade, so a prolonged disruption could feed through to refined fuel costs and inflationary pressure in importing economies. Reflecting that risk, a March Reuters poll raised its Brent average forecast for 2026 significantly, underlining how quickly analysts’ assumptions have shifted.

Looking ahead, analysts say the near‑term trajectory hinges on the conflict’s duration and the pace of any reopening of shipping routes. Comments from U.S. officials suggesting a possible winding down of military activity can trigger short‑lived pullbacks, but persistent infrastructure damage or further maritime incidents would likely keep a risk premium on oil prices. Market participants will focus on OPEC supply reports, shipping security updates and diplomatic developments for signs of relief or further tightening.