Oil pulls back after $120 surge but stays above $100 as market volatility persists

Oil prices have entered a more volatile phase following last week’s sharp rally to multi-year highs, with the market struggling to establish a clear direction amid ongoing geopolitical uncertainty.

Brent crude briefly crossed the $120 per barrel mark earlier in the week—its highest level since the conflict began in late February—before retreating and posting consecutive declines toward the end of the week. Brent settled at $108.17 per barrel on Friday, down $2.23, while WTI closed at $101.94 per barrel, lower by $3.13.

Despite this correction, the broader bullish trend remains intact. Intraday trading shows prices moving higher again, with Brent around $110.75 per barrel and WTI near $104.30 per barrel. This rebound highlights continued buying interest, as supply concerns linked to disruptions in the Strait of Hormuz keep prices supported above the $100 level.

Market cautious on US intervention plans
Sentiment briefly softened after the United States indicated plans to assist stranded vessels in the Strait of Hormuz, aiming to ease pressure on one of the world’s most critical oil transit routes. However, market confidence in the effectiveness of these measures remains limited.

Recent reports of tanker-related incidents near key Gulf locations have reinforced security concerns, while uncertainty around the extent of US naval involvement has added to doubts. As a result, any price decline linked to these developments has been short-lived, with the market quickly stabilizing.

Supply disruptions continue to support prices

Ongoing supply constraints remain the key factor underpinning oil prices. Restricted flows through the Strait of Hormuz, combined with broader geopolitical tensions, have tightened global supply conditions.

The situation is further complicated by overlapping restrictions, where reduced export activity and targeted measures on shipments have significantly limited available volumes in the market. This has already contributed to elevated prices and continues to raise concerns about inventory drawdowns and potential shortages in the coming months.

Limited impact from OPEC+ output increase

While OPEC+ has announced a production increase of 188,000 barrels per day for June across several member countries, the actual impact on supply is expected to be minimal under current conditions.

Export constraints in the Gulf mean that key producers may not be able to fully deliver additional volumes to the market. As a result, the increase is seen more as a policy signal rather than a meaningful boost to physical supply.

Outlook remains volatile with upside risks

Looking ahead, oil markets are expected to remain highly sensitive to geopolitical developments. While short-term price corrections may occur in response to diplomatic signals or operational updates, the absence of a clear resolution keeps the overall risk tilted to the upside.

Frequent intraday recoveries indicate that traders continue to factor in prolonged disruptions. Until normal shipping activity resumes through the Strait of Hormuz, the market is likely to remain tight, volatile, and supported above key price levels.

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