The declines follow last week’s dramatic surge, when WTI rose 11% and Brent gained 8%—the largest single-session jumps in absolute terms since 2020—underscoring the volatility gripping energy markets.
Tensions remain high in the Strait of Hormuz, a key artery for global oil shipments, as Iran rejected immediate proposals to reopen the waterway despite receiving a framework plan from the U.S. aimed at ending hostilities. The move comes after former President Donald Trump warned Tehran of severe consequences if a deal was not reached by the end of Tuesday.
Iran has reportedly formulated its positions in response to recent ceasefire proposals but has shown little willingness to engage directly with U.S. officials in the near term. The strait, which carries oil and petroleum products from Iraq, Saudi Arabia, Qatar, Kuwait, and the United Arab Emirates, has remained largely closed following Iranian attacks on commercial shipping since the conflict began on February 28.
“Not being able to open the Strait of Hormuz is becoming more a question of political victory,” said Mukesh Sahdev, founder and CEO of consultancy XAnalysts.
Supply disruptions have prompted refiners to seek alternative crude sources, particularly from the U.S. and the North Sea. Some vessels—including an Omani-operated tanker, a French-owned container ship, and a Japanese-owned gas carrier—have navigated the strait since Thursday, reflecting Iran’s selective allowance of passage for nations it considers more friendly.
The squeeze has pushed spot premiums for WTI to record highs, as Asian and European refiners compete for available crude to offset the impact of Middle Eastern supply interruptions, industry sources told Reuters.
On the production side, OPEC+ agreed last week to a modest increase of 206,000 barrels per day for May. However, several key members are currently unable to raise output due to conflict-related disruptions. Saudi Aramco set the official selling price of May Arab Light crude to Asia at a record premium of $19.50 above the Oman/Dubai average, up $17 from April.
Meanwhile, Russian oil exports have also faced disruptions following Ukrainian drone strikes on Baltic Sea terminals, though media reports indicated that loadings at the Ust-Luga terminal resumed on Saturday. Exports from the Black Sea port of Tuapse are projected to rise to 794,000 metric tons in April, an 8.7% increase from March, according to trader data.
Analysts warn that, with ongoing conflict in the Middle East and logistical challenges in Russia, oil markets are likely to remain volatile in the near term, with prices sensitive to both political developments and supply constraints.