^{Photo: Bloomberg News}

Global oil markets moved lower again as fresh policy signals from Washington hinted at a potential supply injection that could cool prices in the near term. The decline comes after Scott Bessent indicated that the United States is considering lifting restrictions on Iranian crude currently stranded in offshore storage, a move designed to stabilize markets shaken by recent geopolitical disruptions.

Benchmark prices reflected the shift in sentiment. Brent crude dropped 1.62% to $106.89 per barrel, while U.S. West Texas Intermediate (WTI) fell 1.89% to $94.32 in early trading. The pullback follows a sharp rally earlier in the week when concerns over supply disruptions intensified after Iran effectively restricted flows through the Strait of Hormuz, a critical transit route responsible for nearly one-fifth of the world’s oil shipments.

According to Bessent, roughly 140 million barrels of Iranian oil are currently held in floating storage aboard tankers due to sanctions. Reintroducing this volume into global supply chains could provide immediate relief, equivalent to about one to two days of global oil consumption. Market analysts believe such a release could help cap prices over the next 10 to 14 days, particularly if combined with improving shipping conditions in the Gulf region.

Geopolitical developments are also playing a key role in shaping expectations. Israeli Prime Minister Benjamin Netanyahu confirmed that Israel is actively supporting efforts to restore normal operations in the Strait of Hormuz. He suggested that recent military actions have significantly weakened Iran’s strategic capabilities, raising the possibility that the conflict may de-escalate sooner than initially feared. Any reopening of the strait would immediately reduce supply chain risks and ease freight bottlenecks that have driven up tanker rates in recent weeks.

Despite the recent dip in prices, financial institutions remain cautious about the broader outlook. Citigroup has raised its short-term oil price forecasts, citing ongoing uncertainty and tight supply conditions. The bank now expects both Brent and WTI crude to average around $120 per barrel over the next one to three months. In a more extreme scenario where disruptions persist or escalate, prices could spike as high as $150 per barrel.

However, Citi’s baseline scenario assumes that tensions will begin to ease within four to six weeks. Under this outlook, supply chains would gradually normalize, allowing Brent crude to fall back into the $70 to $80 range by the end of the year. This projection reflects the expectation that current price spikes are largely driven by temporary geopolitical risk premiums rather than structural supply shortages.

Market structure indicators further highlight ongoing stress. The spread between Brent and WTI has widened notably, driven by elevated transportation costs, rerouted shipping lanes, and strong demand from U.S. Gulf Coast refiners seeking inland crude. Freight rates for oil tankers have surged as vessels avoid high-risk zones, adding another layer of cost pressure across the supply chain.

Looking at worst-case scenarios, concerns remain elevated. Reports indicate that Saudi officials believe oil prices could surge beyond $180 per barrel if disruptions tied to the Iran conflict extend through late April. Such a spike would have significant global consequences, including renewed inflationary pressure, higher fuel costs, and increased volatility across financial markets.

Overall, the oil market remains highly sensitive to both policy decisions and geopolitical developments. While the potential release of Iranian crude offers short-term relief, the broader outlook continues to hinge on the stability of key transit routes and the pace of diplomatic progress in the region.