Oil swings as Iran de-escalation hopes clash with ongoing Hormuz supply fears
By Reuters, March 31, 2026Oil prices were volatile on Tuesday, March 31, 2026, as investors weighed the possibility of United States (US) President Donald Trump ending the Iran war against supply shocks from a prolonged closure of the Strait of Hormuz, a major artery for global oil flows.
Brent crude futures for May were up 65 cents, or 0.58 per cent, at about Ksh14,900 per barrel at 9: 55 am in a session that has seen prices swing between a 2 per cent rise and a 1 per cent fall. The May contract expires on Tuesday, and the more active June contract was at approximately Ksh14,100.
U.S. West Texas Intermediate futures for May were up 2 cents, or 0.02 per cent, at Ksh13,300 a barrel after reversing earlier falls to hit their highest since March 9, 2026.
Analysts said prices had briefly reacted to the idea of the war ending, but any meaningful change would not materialise until shipping through the Strait of Hormuz was completely reinstated.
Trump told aides he is willing to end the military campaign against Iran even if the Strait of Hormuz remains largely closed, leaving its reopening for a later date, The Wall Street Journal reported on Monday, March 30, 2026, citing administration officials.
The U.S. president had warned that the U.S. would “obliterate” Iran’s energy plants and oil wells if Tehran did not reopen the waterway.
Iran’s effective closure of the Strait of Hormuz, which carries about a fifth of global oil supply and large numbers of liquefied natural gas tankers, has pushed Brent futures up 59 per cent so far in March, a record monthly gain, while WTI is up 58 per cent, the biggest jump since May 2020.
For the quarter, Brent is up about 86 per cent, and WTI is up about 79 per cent.
“While diplomatic signals remain mixed, the ground reality suggests that uncertainty will persist,” said Sugandha Sachdeva, founder of SS WealthStreet, a New Delhi-based research firm.
“Even in the event of de-escalation, restoring damaged infrastructure will take time, keeping supply tight.”
Highlighting the threat to seaborne energy supplies, Kuwait Petroleum Corp on Tuesday said its fully loaded crude oil tanker Al Salmi, capable of carrying up to 2 million barrels, was struck by a claimed Iranian attack at a Dubai port. Officials also warned of potential oil spills in the area.
Yemen’s Iran-aligned Houthi forces targeted Israel with missiles on Saturday, raising fresh concerns about possible disruption in the Bab el-Mandeb Strait, the chokepoint linking the Red Sea and Gulf of Aden for ships moving between Asia and Europe via the Suez Canal.
Saudi Arabia has rerouted its Gulf crude exports through this passage, with some 4.658 million barrels per day sent to the Red Sea port of Yanbu, Kpler data showed, a sharp rise from an average of 770,000 bpd in January and February,2026.
“With the oil market’s remaining buffers gradually being consumed, the market’s vulnerability to a prolonged closure of (Hormuz) means that we are moving closer to physical oil shortages across a wider geographic scope, and the upward momentum for oil prices is likely to strengthen further,” said Lin Ye, a vice president for commodities markets and oil at Rystad Energy.