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Oil Remains Supported Amid Escalating Iran Blockade Risks
Donald Trump has announced a de facto maritime blockade of Iran, seeking to restrict the movement of its tankers, as well as vessels paying transit fees — effectively “sealing Hormuz from the outside”. Market pricing suggests the blockade may endure. According to Polymarket, the probability of it being lifted by the end of April is currently estimated at just 36%. Against this backdrop, concerns over oil prices appear limited in the near term, with crude likely to remain supported at current levels for at least the coming months. Brent crude oil (XBRUSD) is currently trading at approximately $104, having risen by around 7.5% from the previous close.
At the same time, Trump is reportedly considering a resumption of limited strikes on Iran following the breakdown in negotiations. More than 15 US naval vessels are said to be positioned in the region in support of blockade operations. However, a full-scale military campaign is still regarded as less probable, given the risks of broader regional destabilization and the administration’s apparent reluctance to become entangled in a full conflict.
In the near term, oil prices are likely to remain well supported, underpinned by a persistent geopolitical risk premium and constrained supply dynamics. Even in the absence of further escalation, the continuation of the blockade alone is sufficient to keep the market tight.
Looking slightly further ahead, the trajectory of prices will hinge on whether tensions stabilise or intensify. A prolonged standoff would likely keep prices elevated or drive them higher, whereas any credible de-escalation could prompt a sharp correction as risk premia begin to unwind.
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