Week in Review – Oil Prices Rise, but Weekly Loss Signals Market Uncertainty

Oil markets are ending the week with a mixed signal: prices are climbing again, but not enough to offset earlier losses. This morning, prompt WTI crude oil rose by more than $2 per barrel, while Brent crude oil traded near $111/bbl after gaining roughly 2-3% on the day. Despite that upward move, both benchmarks remain on track to close the week lower, marking the first weekly decline since the start of the Iran conflict. That pullback comes even as prices remain significantly elevated, with Brent up more than 50% and WTI up roughly 45% since late February.

The movement reflects a market caught between tightening supply and uncertain geopolitics. President Donald Trump extended the deadline for Iran to reach a deal by another 10 days, temporarily easing fears of immediate strikes on energy infrastructure. At the same time, the buildup of military presence in the region, including the potential deployment of additional U.S. troops, and continued threats from both Iran and Israel are keeping risk premiums firmly embedded in prices.

What's driving the market now isn't just current supply loss; it's how high prices could go if disruptions continue. Analysts at Macquarie Group are among the most direct, warning that crude could reach $150 per barrel if the Strait remains effectively closed through April. They also note that prices could climb even further - toward $200 - if the conflict extends into mid-year.

Other institutions are pointing to similar upside risks. UBS estimates that a prolonged disruption lasting a couple of months could push oil to around $150 per barrel, particularly if flows through Hormuz remain constrained.

Even outside traditional commodity analysts, the message is consistent. BlackRock CEO Larry Fink has warned that oil reaching $150 could have broader economic consequences, including the risk of a global recession if instability persists.

Underneath these forecasts is a supply picture that remains tight. The conflict has already removed an estimated 11 mbpd from global supply, and with roughly one-fifth of global oil flows tied to the Strait of Hormuz, any prolonged disruption continues to support higher prices. That dynamic explains why prices can move sharply higher on any escalation headline, even as short-term developments, like extended negotiation deadlines, create temporary pullbacks.

At the same time, the economic ripple effects are starting to come into focus, particularly in the labor market. Analysis from Goldman Sachs Research suggests that while higher oil prices still tend to slow job growth and push unemployment higher, the impact today is significantly smaller than in past decades. The firm estimates the current oil shock could raise the unemployment rate by about 0.1 percentage points, contributing to a broader increase to around 4.6% by 2026. Gains in oil-related employment are also expected to be more limited, as improvements in production efficiency reduce the need for additional labor even if output increases.

Recent labor data reinforces that trend. Initial jobless claims remain low and broadly in line with expectations, indicating that layoffs have not accelerated despite rising energy prices. Continuing claims also remain contained, pointing to a labor market that is still stable, even as broader economic uncertainty builds.

In short, the market is balancing two competing realities: near-term diplomatic signals that can cool prices, and longer-term risks that could push them significantly higher. The result is a market that can rally sharply one day, pull back the next, and still remain historically elevated throughout.

Prices in Review

Crude prices declined early in the week before recovering toward the end. Prices opened at $100.51 on Monday and dropped to $88.78 on Tuesday, then fell slightly to $88.49 on Wednesday. Prices recovered to $91.38 on Thursday and rose further to $96.89 on Friday. Throughout the week, crude prices decreased by $3.62 per barrel, or 3.6%.

Diesel opened at $4.7136 on Monday and dropped to $4.1009 on Tuesday, then edged up to $4.1598 on Wednesday. Diesel prices softened again on Thursday to $4.0553, before recovering to $4.2300 on Friday. Overall, diesel prices decreased by $0.4836 during the week, representing an overall 10.3% decline.

Gasoline opened on Monday at $3.3734, then dropped to $2.9746 on Tuesday, the week's lowest level. Prices recovered to $3.0483 on Wednesday, then dipped slightly to $3.0081 on Thursday. This morning, gasoline opened at $3.1032, down $0.2702 per gallon, or 8.0% during the week.