Oil Prices Climb as Supply Channel Blockade Lingers
Oil prices increased on Monday amid concerns that the Strait of Hormuz blockade could delay market recovery for several months, even if passage is reopened.
International benchmark Brent crude traded at $101.34 per barrel, up around 2.2% from the previous close of $99.13. US benchmark West Texas Intermediate increased about 1.9% to $96.19 per barrel, compared with $94.40 in the previous session.
Russian Deputy Prime Minister Alexander Novak said on Sunday that he expects it will take several months for the oil market to recover to its previous level, even if the Strait of Hormuz is reopened.
Speaking in an interview with the Russian VGTRK broadcasting company, Novak said the crisis in the Middle East has led to a significant global undersupply of energy resources that will not be easy to overcome in the short term.
“The crisis is very deep — a very large number of barrels of oil did not reach the market during this period, and a large number of ships have accumulated in the Strait of Hormuz. Therefore, of course, it will take some time to rebalance and recover to the previous level. In our view, that will be several months,” Novak said.
This mismatch is expected to keep prices elevated in the near term, as traders factor in persistent supply tightness, slower inventory replenishment, and uncertainty over the pace of market rebalancing, maintaining upward pressure on oil prices.
Since the US-Israel war on Feb. 28, Tehran has maintained control of the Strait of Hormuz, hitting global energy supplies, mostly across Asia. The war is currently on hold and efforts for a permanent end to the conflict are ongoing.
On the other hand, Iran’s proposal to reopen the Strait of Hormuz and end the war helped cap further price gains by easing supply concerns.
The proposal was conveyed to the US through mediators, including Pakistan, amid a diplomatic stalemate over Iran’s nuclear program, according to the Axios news site.
Sources said the plan seeks to bypass disagreements over uranium enrichment in favour of a faster deal focused on lifting a blockade and restoring maritime traffic, the media outlet reported.
Under the proposal, a ceasefire would be extended for a long period or made permanent, while nuclear talks would begin only after the strait is reopened and restrictions are lifted.
A US official and sources familiar with the discussions said the White House has received the proposal but has not indicated whether it will pursue it.
US President Donald Trump is expected to hold a Situation Room meeting on Monday with senior national security officials to discuss the deadlock and possible next steps.
Trump said he prefers maintaining the naval blockade on Iranian ports to increase pressure on Tehran.
“When you have vast amounts of oil…if this line is closed…that line explodes from within,” he said, adding Iran may have only “about three days” before facing internal pressure.
The decision to postpone nuclear negotiations has raised uncertainty over the durability of a ceasefire, as Trump maintains a firm stance on preventing Iran from continuing uranium enrichment.
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