Energy markets are surging today as prices climb, erasing much of last week’s more than 6% slump across both benchmarks. Light Crude Oil Futures (WTI) have surged back above 100, up 4.85%, while ICE Brent Crude Futures are following a similar trajectory, trading at 105.55, up 4.21%.
Today’s surge in oil prices comes amid a repeat of scenarios we have seen previously during the war in the Middle East, namely a return to escalation over the weekend after signs of de-escalation were reported during recent trading sessions.
After President Donald Trump’s surprise remarks last week about substantial progress in the negotiations with Iran and the suspension of Project Freedom, he has returned to the current course of escalation once again. Trump has rejected Iran’s latest counter-proposal to end the war, as he told Axios yesterday, labelling it also “TOTALLY unACCEPTABLE” and “inappropriate.” Trump stated, “I don’t like their letter. I don’t like their response,” following ten days of diplomatic anticipation.
This confirms that neither side is determined to move towards de-escalation, and it keeps the door open to further waves of mutual escalation that could threaten the region’s oil infrastructure. It also appears that any previous narratives for ending the war were aimed solely at forcing energy prices down in order to reduce the political cost of the war within the United States
This comes, as we discussed earlier, at a time when the United States has not achieved its primary objectives in this war. One of these objectives is to neutralise the nuclear program, which could be the source of future escalations. One of these objectives is to neutralise the nuclear program, which could be the source of future escalations, a point also raised by the Israeli side.
In a recent interview with CBS News’ 60 Minutes, Prime Minister Benjamin Netanyahu emphasised that the conflict with Iran remains unfinished as long as the regime holds enriched uranium. Netanyahu insisted that this material must be extracted from the country, stating, “You go in, and you take it out.” He revealed that President Trump has expressed a personal desire to “go in there” to secure the material, an operation that Netanyahu suggested could be accomplished physically, with or without a formal agreement.
This military operation deep inside Iran could require the deployment of thousands of troops, along with equipment, bases, and even airstrips near nuclear facilities, which could take weeks to months, according to several previous reports. During this period, we might witness further escalation from the Iranian side, which may seek to broaden the costs of this war by targeting the region’s energy infrastructure on a much larger scale than before. Furthermore, inflicting significant losses on the American side during these potential operations could trigger cycles of escalation and reciprocal attacks, potentially placing the infrastructure of all kinds in the crosshairs of war.
The narrative of a return to full-blown war and escalation comes at a time when the global oil inventory crisis is worsening, even though market pricing downplays it.
According to Bloomberg, the war with Iran is depleting the world’s oil buffers at a record pace, threatening a major supply shock. Morgan Stanley estimates that global stockpiles plummeted by approximately 4.8 million barrels per day between March 1 and April 25, a drawdown that far exceeds any previous peak recorded by the International Energy Agency.
With over a billion barrels of supply lost since the near-closure of the Strait of Hormuz, Natasha Kaneva, head of global commodities research at JPMorgan Chase & Co., warns that inventories in developed nations could hit “operational stress levels” as early as next month. While the U.S. has acted as a supplier of last resort, its own distillate stockpiles have reached their lowest levels since 2005. Chevron Corp. CFO Eimear Bonner told Bloomberg TV that the depletion of spare capacity means import-dependent nations will face critical shortages by mid-summer, as total visible inventories approach an “operational floor” required just to keep pipelines and refineries functioning.
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