Oil prices gained today despite leading European nations, Japan and Canada offering to join efforts to secure safe passage for ships through the Strait of Hormuz and the US outlining moves to boost oil supply.
"The potential for a quick reversal in energy prices is unlikely because damage has been done to production," said Ole Hansen, the head of commodity strategy at Saxo Bank. "The fact on the ground remains that we have a tight market."
Brent futures rose $1.20, or 1.1%, to $109.85 a barrel this morning, while US West Texas Intermediate (WTI) crude added six cents, or 0.1%, to $96.20.
For the week, benchmark Brent was on track to rise nearly 7%, while WTI was set to fall about 2% in its first weekly decline in five weeks.
Israel and Iran traded fresh attacks today, following a hit on an oil refinery in Kuwait.
In a joint statement yesterday, after earlier hesitating, Britain, France, Germany, Italy, the Netherlands and Japan expressed "our readiness to contribute to appropriate efforts to ensure safe passage through the Strait", through which 20% of the world's oil and LNG transit.
Looking to curb soaring oil prices, US Treasury Secretary Scott Bessent said the US may soon remove sanctions from Iranian oil stranded on tankers, and said a further release of crude from the US Strategic Petroleum Reserve was possible.
Brent jumped higher than $119 a barrel yesterday, coming close to a March 9 peak, after Iran responded to an Israeli attack on a major gas field by knocking out 17% of Qatar's LNG capacity, causing damage that will take up to five years to repair.
US President Donald Trump said he told Israel not to repeat attacks on Iranian gas infrastructure. Israeli Prime Minister Benjamin Netanyahu said his country had acted alone in the attack and Iran no longer has the capacity to enrich uranium or make ballistic missiles.
Both benchmarks had shed some of their "war premiums" in earlier trade today as world leaders started to acknowledge a need for restraint and de-escalation, said Priyanka Sachdeva, senior market analyst at Phillip Nova. She added that markets will remain sensitive to the critical Hormuz chokepoint.
"The damage has been inflicted, and even if safe passage for tankers is somehow negotiated through Hormuz, reviving logistics fully fledged can take an awfully long time," Sachdeva said.
In a boost to US supply, North Dakota's crude output is expected to rise this month and in following months as operators in the third-largest oil-producing state restart inactive wells and winter restrictions are eased, the state's regulator said yesterday.
The North Dakota Department of Mineral Resources said, however, the pace of activity would depend on how long oil prices stay high and that oil majors' budgets have already been set.
