Brent crude oil price exceeds $120, reaching a four-year high

The upward momentum in oil markets shows no signs of slowing down. Signals that the U.S. will maintain its export sanctions against Iran for a long time to come, combined with a lack of progress in nuclear negotiations with Iran, have pushed crude oil prices to their highest levels in years.

The price of a barrel of Brent crude rose by 1.96% to reach the $120 level, marking its highest figure since 2022. Meanwhile, U.S. West Texas Intermediate (WTI) crude traded at $107.09, up 0.2%. Mid-week, Brent had seen a jump of approximately 6%, while WTI saw a 7% increase.

The Washington administration's preparations to implement a broad blockade that would keep sea lanes closed to Tehran have created serious supply concerns in the market. During this process, it was reported that U.S. President Donald Trump rejected Iran's offer to open the Strait of Hormuz, and comments on the matter emphasized that this signals the embargo will continue until a more comprehensive nuclear deal is reached.

In a post on the social media platform Truth Social, Trump used harsh language toward the Iranian administration:

“Iran is not recovering. They don't know how to sign a non-nuclear deal. They need to come to their senses immediately!” he stated. The post was accompanied by an AI-generated image of Trump holding a weapon with explosions in the background, along with the slogan “THERE ARE NO GOOD GUYS ANYMORE!”

While expectations of a supply contraction due to conflicts in the Middle East were highlighted in LSEG reports, the rate of exports from the region has dropped significantly. According to Goldman Sachs estimates, oil exports through the Strait of Hormuz have fallen to just 4% of normal levels.

Experts believe that if the American blockade continues, the supply shortage in the market could deepen due to the restriction of Iran's export capacity and the country's limited storage facilities.

On the other hand, it is predicted that the expected increase in production following the United Arab Emirates' withdrawal from OPEC membership will not be enough to compensate for the supply contraction in the oil market in the short term, and that this effect will only be felt gradually and in the medium term.

News Source: 12punto