Oil prices were rallying again on Wednesday after Iran’s Islamic Revolutionary Guard Corps (IRGC) captured two commercial vessels in the Strait of Hormuz.
Brent crude for June delivery gained 2.99% to trade at $101.40 per barrel at 3.49 pm ET, while the corresponding WTI crude contract was up 3.18% to change hands at $92.52/bbl.
Iranian state media reported that the vessels violated maritime regulations, operated without permits, and tampered with navigation systems.
The IRGC identified the seized ships as Panama-flagged MSC Francesca and Liberia-flagged Epaminondas.
A third ship, identified as the Euphoria, was also fired upon and reportedly became stranded near the Iranian coast.
The seizures came just hours after U.S. President Donald Trump announced that he is extending the ceasefire with Iran indefinitely to allow its leadership time to present a unified proposal to end the ongoing war.
Trump, however, directed the U.S. military to continue the naval blockade of Iranian ports.
And now oil and commodity experts at Standard Chartered have reported that the Brent crude price of $95/bbl appears to represent an uneasy equilibrium between hopes of de-escalation and structural tightness in physical balances that is increasing as time passes.
Despite trading in a $13.71/bbl weekly front-month range, Brent prices for June delivery have traded through $95/bbl on eight of the last nine trading days, and have settled within $1/bbl of it on six of those nine days.
This includes 20 April, when the front-month settled at $95.48/bbl.
The forward curve remains in strong backwardation, with slight rotation w/w; the very back of the curve has pushed slightly higher (Brent for delivery five years out rose by $0.33/bbl w/w to $70.13/bbl), while 2027 contracts have softened incrementally.
1M Dated Brent fell by $8.03/bbl w/w to settle at $96.17/bbl on 20th April, with the dislocation between physical and financial benchmarks tightening.
Dated Brent (or 1M Dated Brent/first-month Dated Brent) is a crucial physical benchmark for pricing crude oil, representing the value of light, sweet crude oil from the North Sea that has a specific delivery date allocated to it, usually within the next 10 to 30 days.
StanChart notes that near-term oil price movements are now largely headline-driven, constantly taking direction from escalation and de-escalation in the US-Iran conflict amid tightening in physical oil markets.
Constrained transit through the Strait of Hormuz has forced Gulf producers to shut-in production, with countries in the region cutting output by between 25% and 80% while spare capacity tightness and reliance on certain transit routes has been highlighted.
The oil experts expect this theme to continue even when OPEC launches its maximum sustainable capacity (MSC) metric.
Last November, OPEC+ mandated the OPEC Secretariat to develop and implement a new Maximum Sustainable Capacity (MSC) metric, with the assessment process scheduled to take place between January and September 2026.
This audited, technical metric will be used to determine the production baselines for the year 2027 onwards, replacing previous politically negotiated quotas.
OPEC defines MSC as “the average maximum number of barrels a day of crude oil that can be produced within 90 days and can be sustained continuously for one full year, including all planned maintenance activities”.
The main objective of the MSC is to reward members who invest in upstream capacity, improve transparency and combat overproduction by closing loopholes.
Meanwhile, Brent crude remains in strong backwardation along the forward curve, with the back stable at $68-70 per barrel (bbl).
StanChart has predicted that oil prices will remain $10-20/bbl higher than pre-conflict levels even after the acute stage of the conflict ends, supported by purchasing for strategic reserves, a focus on resource nationalism and hoarding, as well as the logistical lags caused by the disruption.
That said, natural gas markets have continued to cope remarkably well with the loss of the majority of Middle East gas supply.
Henry Hub gas prices have declined from a one-year high of ~$7.50/MMBtu when the war in Iran started in late February to trade at $2.85/MMBtu on Wednesday, while Europe’s gas prices hovered around €43 per MWh on Wednesday from above €60 per MWh when the war started.
StanChart has noted that expected volumes to be delivered to the market outweigh current and expected reductions over the next few years, helping to contain the market shortfall and associated price reaction.
Still, Europe and Asia will likely be in competition for molecules in the summer months, with Europe already starting to replenish relatively tight storage inventories.
This is likely to support higher prices. U.S. gas prices remain equally muted, dampened by weather and plentiful supply.
However, prices here could see longer-term support from increasing domestic demand for data-centre power generation, heating/cooling as well as export demand for LNG in the medium term.
