Oil gains over 2% as market weighs Iran war supply risks

• Brent crude jumped 2.5% to $102.69 per barrel and WTI gained 2.6% to $95.92, reversing previous session losses after some vessels briefly transited the strait
• UAE, OPEC's third-largest producer, has shut in half its production due to the effective closure of the Strait of Hormuz
• Banks raised long-term oil forecasts: Bank of America lifted 2026 Brent outlook to $77.50 from $61, while Standard Chartered increased its projection to $85.50 from $70, reflecting potential prolonged supply disruption

Oil Gains Over 2% on Iran War Supply Risks

Market Movement:

Oil prices rose more than 2% on March 17, 2026, reversing prior session losses. Brent crude jumped $2.48 (2.5%) to $102.69 per barrel, while WTI gained $2.42 (2.6%) to $95.92. This followed Monday's declines when Brent fell 2.8% and WTI dropped 5.3%.

Supply Disruption:

The Strait of Hormuz—a critical chokepoint handling approximately 20% of global oil and liquefied natural gas trade—remains largely shut due to the U.S.-Israeli conflict with Iran, now in its third week. The effective closure has forced the UAE, OPEC's third-largest producer, to shut in production by half.

Geopolitical Developments:

U.S. allies rebuffed President Trump's call to deploy warships for tanker escort operations through the strait, drawing presidential criticism. Iran has requested India release three seized tankers as part of negotiations for safe passage of Indian vessels. Israel announced plans to continue military operations for at least three more weeks, striking Iranian sites overnight.

Market Response:

To address rising energy costs, strategic reserve releases totaling 400 million barrels have been agreed upon, with possibilities for additional releases. Major banks revised their oil forecasts upward: Bank of America increased its 2026 Brent projection to $77.50 from $61, while Standard Chartered raised its forecast to $85.50 from $70.

Risk Assessment:

Analysts warn that risks remain elevated, with potential for renewed escalation from militia attacks or mining operations. BofA outlined two scenarios: a quick April resolution pushing Brent to $70, or prolonged disruption extending into Q2 with prices reaching $85.