Oil up over 1% as Mideast uncertainty keeps market jittery
By Colleen Howe and Jeslyn Lerh
SINGAPORE, April 1 (Reuters) - Oil rose more than 1% on Wednesday, with Brent futures extending gains after a record monthly rise in March, as Middle East volatility kept markets jittery despite reports that the U.S.-Israeli war on Iran may be nearing an end.
The front-month Brent contract for June LCOc1 climbed $1.40, or 1.4%, to $105.37 per barrel at 0430 GMT. Brent logged a record monthly gain of 64% in March, according to LSEG data that dates back to June 1988.
Meanwhile, U.S. West Texas Intermediate (WTI) crude futures for May CLc1 rose $1.59, or 1.6%, to $102.97 per barrel.
Prices recovered some of their losses from Tuesday, when Brent futures for June delivery settled down more than $3 following unconfirmed media reports that Iran's president was ready to end the war.
President Donald Trump told reporters on Tuesday that the U.S. could end the military campaign within two to three weeks and that Iran does not have to make a deal to end the conflict, his clearest declaration yet that he wants to wind down the month-long war.
Still, even if the conflict ends, infrastructure damage is likely to keep supplies tight, analysts say.
Oil prices will depend on how quickly supply chains normalize afterwards, said Priyanka Sachdeva, senior market analyst at Phillip Nova.
"Even if it starts to de-escalate, the flow of tankers won't resume right away ... shipping costs and insurance, tanker movement will take time to return to normal," Sachdeva said, adding that the actual damage to oil infrastructure could only be assessed afterwards.
Trump has indicated he could end the war before reopening the Strait of Hormuz, a key route through which 20% of global oil and liquefied natural gas trade flows, according to a Wall Street Journal report.
"Even with diplomatic channels reportedly still active and intermittent comments from the U.S. administration predicting a short end to the conflict, the combination of limited tangible diplomatic progress, continued maritime attacks and explicit threats against energy assets keeps supply risks skewed to the upside," LSEG analysts said in a note.
OPEC oil output dropped 7.3 million barrels per day in March compared with the previous month, a Reuters survey showed on Tuesday, illustrating the impact of forced export cuts because of the closure of the strait.
Meanwhile, U.S. crude oil output fell by the most in two years in January following a severe winter storm that knocked production offline in large swathes of the country, data from the Energy Information Administration showed on Tuesday.
