Oil Prices Dip 1% Amid Hints of US-Iran Conflict Resolution

US-Iran Conflict Eases, Crude Oil Prices Snap Gaining Streak

Oil prices reversed their upward momentum on Tuesday, March 31, after reports emerged that US President Donald Trump was open to ending the Iran conflict without reopening the Strait of Hormuz. This news led to a decline in Brent crude futures for May, which fell by $1.22, or 1.08%, to $111.56 per barrel. The May contract expires on Tuesday, while the more actively traded June contract was quoted at $105.76.

The May contract for US West Texas Intermediate (WTI) crude futures also dropped 98 cents, or 0.95%, to $101.90 per barrel, after touching their highest level since March 9 during early trading. The ongoing conflict between the US, Iran, and Israel has driven a sharp rally in crude prices, with Brent crude futures surging 59% so far in March, marking their biggest monthly gain on record. WTI crude has climbed 58% during the month, its strongest rise since May 2020.

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The Strait of Hormuz, a crucial passage that typically handles around one-fifth of global oil supply along with significant volumes of liquefied natural gas, has been effectively closed by Iran. This has driven a significant increase in crude prices, with oil majors and traders cautioning about the risks to seaborne energy supplies amid the conflict.

The Kuwait Petroleum Corporation reported that its fully loaded crude tanker, Al Salmi, with a capacity of up to 2 million barrels, was hit in an alleged Iranian attack at a Dubai port. Authorities also cautioned about the possibility of oil spills in the area. Additionally, Yemen's Iran-backed Houthi forces launched missile strikes toward Israel on Saturday, heightening concerns over potential disruptions at the Bab el-Mandeb Strait, a critical maritime corridor connecting the Red Sea and the Gulf of Aden.

Crude Oil Price Outlook

Commodity & Currency Analyst at Choice Broking, Aamir Makda, believes that crude oil prices will continue to rise, with key moving averages serving as crucial support levels. "These will be crucial support levels to look for," Makda said. Immediate resistance would be at the psychological level of 10,000, breaching of which will boost oil prices and lead to a new all-time high level.

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Founder of SS WealthStreet, Sugandha Sachdeva, on the other hand, believes that crude oil is likely to trade within a wide and volatile range. Key supports are placed at $93 and $73 per barrel (Brent Crude), while on the upside, a retest of $120 remains plausible, with an extended move towards $150 per barrel not ruled out if geopolitical risks intensify further.