By Nora Redmond
President Donald Trump extended the U.S.’s five-day pause on strikes on Iranian energy infrastructure on Thursday.
Oil prices climbed on Friday as the war in Iran entered into its 28th day with no end in sight just yet.
West Texas Intermediate contracts (CL.1) (CLK26) advanced 1.7% to $96.08 a barrel, while Brent crude futures (BRN00) edged 1.4% higher to $103.34.
On Friday, Iranian state media reported that all shipping through the Strait of Hormuz will be prohibited, with “harsh measures” for those who attempt to transit, according to BBC News.
On Thursday night, President Donald Trump extended his five-day cease-fire due to end on Friday, saying strikes on Iran’s power plants and energy infrastructure would now be on pause until April 6. The president claimed the Iranian government requested the change.
Senior officials in Tehran have insisted that no discussions have taken place with Washington. Iran rejected the White House’s 15-point peace plan issued via Pakistan and instead submitted its own list of five demands earlier this week.
According to a Wall Street Journal report, the Pentagon is now weighing deploying up to 10,000 more ground troops to the Middle East, citing people from within the Department of Defense with knowledge of the situation.
“While the rhetoric around de-escalation and dialogue is certainly preferable to outright conflict, the market appears to be growing increasingly numb to President Trump’s verbal reassurances,” Tony Sycamore, market analyst at IG, said. “By extending the deadline, it effectively kicks the can down the road, pushing back any concrete resolution regarding the reopening of the Strait of Hormuz. This, in turn, simply extends the uncertainty weighing on markets and the broader global economy.”
Macquarie has responded to the disruptions by upgrading its forecast for oil prices across the year, with expectations of $83 per barrel for West Texas Intermediate contracts, up from $58. The outlook assumes that the strait will remain closed throughout April.
The firm said that in a scenario where the war continues through the end of June, oil prices could reach $200.
“If the Strait were to stay closed for an extended period, prices would need to move high enough to destroy an historically large amount of global oil demand,” said analysts led by Peter Taylor, head of commodity desk strategy.
-Nora Redmond
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