Oil prices surged sharply on the 29th, with WTI crude rising from the previous close of $99.93 to briefly trade above $109. The intraday gain reached 7% to 7.5%. Brent crude also moved higher and broke above $111, according to the report.
Threats to Strait of Hormuz shipping pushed supply fears to the front
The main catalyst was a worsening geopolitical situation in the Middle East. The report said talks between the United States and Iran over a nuclear agreement and a ceasefire had stalled after Washington rejected Tehran’s proposal to lift restrictions first. That breakdown increased the risk of an effective blockade and direct threats to shipping through the Strait of Hormuz, one of the world’s most important energy corridors.
As those risks grew, the market moved quickly to price in supply disruption. The report described the potential interruption of millions of barrels per day of crude supply from the region as a direct driver of the rally. Traders reacted by adding a larger geopolitical premium to oil prices, and the move was reflected in the rapid jump across benchmark contracts.
Falling US inventories and UAE's OPEC exit added to the squeeze
Supply-side pressure was not limited to geopolitics. The report also pointed to fresh data from the US Energy Information Administration showing a notable drop in US crude inventories. Lower stockpiles tend to reinforce concerns about tighter near-term supply, and in this case they added momentum to an already stressed market.
Another factor was the UAE’s announcement that it would leave OPEC and OPEC+ on May 1. The report said that move disrupted expectations around coordinated production policy and introduced new uncertainty into the market’s pricing framework. With several negative supply signals hitting at once, concern over a longer period of tight oil availability intensified.
Inflation concerns may build if crude holds above $100
The report warned that if oil remains above $100, global inflation pressure could rise again and complicate the Federal Reserve’s path toward rate cuts. Higher energy prices also tend to weigh on risk appetite across financial markets, including crypto and other volatile assets.
With WTI moving above $109 and Brent above $111, the market response showed how quickly traders were repricing crude around supply security and geopolitical disruption.