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US Oil Update: Futures Trim Gains as Markets Weigh Iran, Israel Ceasefire

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Crude futures pared early gains in midday trading on Monday after Iran and Israel halted military attacks against one another, offering a reprieve to energy markets that had earlier surged on fears of a broader conflict in the Middle East.

Front-month West Texas Intermediate crude futures were up 0.70% to $91.17 per barrel, while Brent futures were up 1.30% to $94.31/bbl.

Saxo Bank strategists said the exchange is one of the most serious tests of a ceasefire that took effect on April 8 to halt fighting involving the US-Israel alliance and Iran.

On Monday, Iran's central military command, Khatam al-Anbiya, reportedly ended military operations against Israel but warned of much harsher actions if Jerusalem continued to attack, including in southern Lebanon.

Israel, in response, said it had halted attacks but warned that in the event that Iran resumes military strikes, "we will respond with overwhelming force."

President Trump said in a Truth Social post that both countries are seeking to agree to an immediate ceasefire.

Soojin Kim, research analyst at MUFG, said that the renewed escalation has reinforced fears of prolonged supply disruptions, keeping upward pressure on oil prices despite OPEC+ plans to gradually increase output.

The ongoing Middle East conflict and the double-closure of the Strait of Hormuz are raising concerns that the world will need to tap crude inventories further, after the International Energy Agency said global oil inventories could hit critical levels ahead of the peak summer demand period.

Trump said that the US blockade of the Strait would remain in full force until a final deal is reached.

Saxo Bank analysts said the near-closure of the Hormuz continues to tighten global energy markets, with several oil majors warning that the window before physical shortages emerge may be measured in weeks rather than months.

Fueling bullish sentiment, Yemen's Houthi rebels said on Monday that they would impose a complete ban on Israeli vessels in the Red Sea, according to media reports. The Houthis said that any Israeli maritime navigation in the Red Sea will be considered a military target and will be struck.

On the supply side, OPEC+ agreed to increase targets by 188,000 barrels per day from July, according to an OPEC statement, marking the fourth oil output quota hike approved since the outbreak of the conflict.

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