Peace signals temper crude rally, Europe jet fuel tightness intensifies
Tentative diplomatic signals offer limited relief to markets still dominated by supply disruption concerns surrounding the Iran war. At the time of writing, Brent crude futures hovered around $105–106/bbl after earlier trading above $107/bbl, while West Texas Intermediate (WTI) held near $95–97/bbl.
Prices softened modestly following reports of renewed diplomatic engagement. Iranian Foreign Minister Seyed Abbas Araghchi is expected to visit Pakistan for talks. Separately, Israel and Lebanon agreed to extend their ceasefire by 3 weeks after meetings with US officials in Washington.
Despite these developments, market participants remain cautious, with analysts warning that any easing in risk premiums may prove temporary. Ongoing tensions linked to the US-Iran conflict continue to disrupt flows through the Strait of Hormuz, a critical artery for global oil trade.
In remarks at CNBC’s Converge Live conference, Fatih Birol, executive director of the International Energy Agency (IEA), described the situation as an unprecedented energy security challenge, noting that the strait is operating under what he termed a “double blockade,” severely constraining tanker movements.
The impact is being felt acutely in refined product markets, particularly in Europe’s aviation sector. With Middle Eastern exports curtailed, European refiners have shifted output toward jet fuel production, though with limited flexibility. According to Frans Everts of Shell plc, refineries across the region are operating in “max jet mode,” with only marginal capacity to increase yields further.
Inventory data underscore the tightening balance. Jet fuel and kerosene stocks in the Amsterdam-Rotterdam-Antwerp hub fell to 597,000 metric tons, the lowest level since April 2020, declining 10% year-on-year. In response, Europe has increasingly relied on imports from the US Gulf Coast to offset lost Middle Eastern supply.
According to IEA, global oil supply plunged by 10.1 million b/d to 97 million b/d in March due to attacks on energy infrastructure and restrictions on tanker movements through the Strait of Hormuz. Oil exports from the Gulf collapsed, with overall losses exceeding 13 million b/d.
In March, oil demand declined by 800,000 b/d year-on-year; demand is projected to slide further by 2.3 million b/d in April, IEA said. Global oil demand in 2026 is currently forecast to decrease by 80,000 b/d—a downward revision of 730,000 b/d compared with the IEA's previous projections.
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About the Author
Conglin Xu
Managing Editor-Economics
Conglin Xu, Managing Editor-Economics, covers worldwide oil and gas market developments and macroeconomic factors, conducts analytical economic and financial research, generates estimates and forecasts, and compiles production and reserves statistics for Oil & Gas Journal. She joined OGJ in 2012 as Senior Economics Editor.
Xu holds a PhD in International Economics from the University of California at Santa Cruz. She was a Short-term Consultant at the World Bank and Summer Intern at the International Monetary Fund.