HOUSTON, April 2, 2026, 15:07 CDT
Oil shot higher Thursday, with Brent topping $109 a barrel and U.S. crude WTI climbing past $111, after President Donald Trump confirmed Washington would press on with attacks against Iran and offered no indication of when the vital Strait of Hormuz might reopen. That spike delivered WTI its steepest daily gain since 2020.
The previous day saw a sharp reversal. Brent wrapped up Wednesday at $101.16, WTI at $100.12, after Trump told Reuters the U.S. might exit the war “pretty quickly.” That optimism didn’t last. By Thursday, the relief trade was over, hopes for a quick end to supply disruptions faded, and traders no longer expected losses to ease before the U.S. gasoline demand peak in mid-May. Reuters
This stretches well past futures trading. GasBuddy’s Patrick De Haan warned U.S. gas prices, already north of $4 a gallon this week, might surge to $5 in just a month if a way to reopen Hormuz isn’t found. International Energy Agency head Fatih Birol, for his part, projected oil supply losses in April to be double those of March and flagged “a major, major disruption.” Reuters
Physical markets are showing the strain. U.S. clean-fuel exports surged to an all-time high of 3.11 million barrels per day in March, as buyers across Europe, Asia, and Africa scrambled for alternatives. “These flows are a reflection of the global supply tightness,” Kpler analyst Matt Smith said, with the U.S. Gulf Coast sending barrels overseas. Reuters
Shipping costs are climbing too. Vessel availability out of the U.S. Gulf Coast has dropped 41% in the past month, and Okeanis ECO Tankers CEO Aristidis Alafouzos called the jump in freight rates “unprecedented.” Reuters
The futures curve echoed the shift. On Thursday, backwardation widened sharply—May WTI was priced roughly $15.70 a barrel over June. That gap highlights how buyers snapped up prompt barrels, unwilling to wait for relief. The squeeze showed no sign of letting go.
OPEC+ could consider another production hike when eight major members convene Sunday, just weeks after signing off on a 206,000-barrel-per-day boost for April. With the Strait of Hormuz effectively blocked, Saudi Arabia, Iraq, Kuwait, and the UAE have all been forced to limit supply. Only Riyadh and Abu Dhabi can divert some crude via other channels, but that hasn’t eased the crunch much. “Pretty academic,” is how Energy Aspects’ Richard Bronze sums up the case for higher output as long as the disruption drags on. Reuters
U.S. shale isn’t rushing in to help. Dallas Fed President Lorie Logan pointed out that producers want to see sustained higher prices before opening their wallets, saying, “not hearing that we’re going to see a dramatic increase in production here in the short run.” Baker Hughes’ numbers back that up; the oil rig count ticked up just two to 411 this week. Reuters
But the setup could unravel quickly if diplomatic efforts get traction. Iran is working with Oman on a protocol to oversee strait traffic, while Britain is pulling together around 40 nations for talks on potential reopening. “If Strait of Hormuz opens up in couple of weeks this risk premium will immediately go down,” said Again Capital’s John Kilduff. Reuters
Banks, for their part, aren’t seeing it that way right now. J.P. Morgan flagged the potential for oil to push up to $120-$130 soon, and possibly break above $150 if Hormuz disruptions stick around through mid-May. Still, their main scenario expects talks to resume, the route to reopen, and prices to cool off as the year moves on.
