Oil Markets Reprice War Risk After Congress Rejects Iran Pullback – Crude Oil Prices Today | OilPrice.com

Oil markets clawed back their recent losses, with oil prices rallying after Congress voted in favor of keeping the U.S. military in Iran. The House rejected a resolution requiring President Trump to withdraw U.S. forces from the conflict with Iran, with Republicans largely supporting continued intervention, citing the need to tackle Iran’s nuclear capabilities. Brent crude for June delivery gained 4.7% to trade at $101.7 per barrel 6:.44 pm ET on Thursday, while WTI crude spiked over 4% immediately after the vote, but by evening was trading down 1.38% at $93.38/bbl. The resolution failed in a razor-thin 213-214 vote following a similar result in the Senate just one day prior, with voting largely along partisan lines and Republicans unified behind Trump. While the bid to end the war failed, some Republicans have demanded that the administration should soon present a clear exit ramp or authorization of force to define the operation’s limits as it nears the 60-day War Powers Act deadline around May 1. Critics of the continued engagement have highlighted the death of at least 13 U.S. service members, billions in spending and soaring domestic gas prices.

The failure of the resolution has renewed fears of a prolonged conflict and high fuel prices amid the likelihood of losing even more barrels from the market. According to oil and commodity analysts at Standard Chartered, the US-imposed counter blockade could remove an extra 1.5-1.8mb/d of Iranian crude from the market, mostly destined for China, increasing its exposure to the conflict.

StanChart notes that whereas front-month prices have surged above $120/bbl during spikes, the long-dated or back-end of the curve is stabilizing in the $68–$70 range. Front-month Brent contracts are trading at a big premium over deferred contracts: the spread between 1st and 12th positions has widened, indicating the market is paying a premium for instant delivery to replace disrupted Middle Eastern supplies. The steepness is being driven by the U.S. naval blockade of Iranian ports and resulting constraints on seaborne crude trade. The market is in effect actively pricing a high war premium that is expected to fade over time, rather than a permanent structural shortage. However, StanChart has predicted that oil prices will remain $10-20/bbl higher than pre-conflict levels, supported by purchases for strategic reserves, a focus on resource nationalism and hoarding, as well as the logistical lags caused by the disruption.

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StanChart has also highlighted several risks that could emerge as a result of the counter-blockade by the United States. First off, Iran may respond by calling on the Houthis to attack vessels transiting the Bab al-Mandeb Strait, the southern exit route from the Red Sea and one of the two exits that Saudi Arabian crude exports can currently take. Currently, the Houthis have a ceasefire agreement with the U.S. that was signed in May 2025. This would present an acute escalation of the conflict, with the ceasefire having worked well so far other than random strikes on Israeli positions. Second, the deployment of many more military vessels in the Strait of Hormuz increases the operational risk of an incident that could open the doors to further escalations or broader maritime tensions that spill outside the Gulf. Finally, increased risk of delays, inspections and interdictions is likely to result in even higher freight and insurance costs. The conflict has triggered a dramatic surge in shipping costs, with war risk insurance premiums spiking by 200% to 300%. Premiums for passing through the Gulf have skyrocketed from 0.02%–0.05% of the vessel’s value to 5%-10%. The conflict is pushing ships toward longer routes, including around the Cape of Good Hope, which adds significant transit time and costs.

In contrast to volatile oil markets, natural gas markets continue to cope remarkably well with the near-term loss of the majority of Middle East gas supply. StanChart notes that the disruption to Qatari and UAE LNG cargoes is being broadly balanced by expected LNG supply growth in 2026, most notably from the U.S. Indeed, expected volumes to be delivered over the next couple of years outweigh current and expected reductions, which is containing the market shortfall and associated price reaction. U.S. gas prices have cooled off considerably, with Henry Hub prices pulling back from above $7.40/MMBtu when the war started in late February to $2.65/MMBtu currently. Meanwhile, European natural gas futures were trading at €42.42 per MMBtu on Thursday, a sharp pullback from above €60 per MMBtu a month ago.

That said, StanChart notes that Europe and Asia will be in competition for gas supplies in the summer months, with Europe looking to replenish relatively tight storage inventories. The analysts see this supporting prices to potentially over €80 per megawatt hour (MWh). StanChart is also bullish about U.S. gas thanks to increasing domestic demand for data-centre power generation, heating/cooling and export demand for LNG in the medium term.

By Alex Kimani for Oilprice.com

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