Brent crude futures declined sharply on Tuesday, with the June contract falling more than $3 amid unconfirmed reports that Iran may be open to ending the conflict if certain conditions are met. The more actively traded June Brent contract settled down $3.42 at $103.97 per barrel, reversing earlier strength following headlines suggesting potential de-escalation. Meanwhile, the expiring May Brent contract—on track for a record monthly gain—settled up $5.57, or 4.9%, at $118.35, with trading volumes thinning significantly as liquidity rolled into June. U.S. West Texas Intermediate (WTI) futures fell $1.50, or 1.5%, to settle at $101.38.
Despite Tuesday’s pullback, crude benchmarks posted historic gains in March. Front-month Brent surged approximately 64% on the month, while WTI advanced around 52%, marking one of the strongest rallies on record as supply disruptions intensified.
Price action continues to be driven by shifting expectations around the duration of the conflict and the timing of any supply recovery. Reports of a potential ceasefire triggered a swift selloff, reflecting the market’s sensitivity to any indication that flows through the Strait of Hormuz could resume and reduce the embedded geopolitical risk premium.
Underlying fundamentals remain tight. Escalating attacks on energy infrastructure across the Gulf have contributed to what is being described as one of the most severe oil and gas supply disruptions on record. OPEC production saw a sharp month-over-month decline, underscoring the scale of forced outages.
Market volatility has been elevated, particularly around contract expiry, with wide intraday price swings reflecting uncertainty around both geopolitical developments and near-term supply availability.
While some mitigating measures—such as reserve releases and adjustments to sanctions—have been introduced, these are expected to provide only temporary relief. With global spare capacity and inventory buffers continuing to tighten, the market remains highly exposed to prolonged disruptions.
Even in a de-escalation scenario, the timeline for restoring damaged infrastructure is likely to keep supply constrained in the near term, supporting continued price volatility.