Oil Prices Recover Amidst Middle East De-escalation Hopes and Iranian Review of U.S. Proposal
U.S. Oil prices rose in early trade on Thursday, recovering some of the previous day’s losses as investors assessed prospects for de-escalation in the Middle East and Iran reviewed a U.S. Proposal to end the war, which has disrupted energy flows from the Gulf.
U.S. West Texas Intermediate (WTI) crude futures climbed to $91.42 a barrel at the open, and were up 93 cents, or 1%, at $91.25 a barrel as of 2225 GMT on March 25, 2026. Reuters reported that WTI lost 2.2% on Wednesday.
Iran Considers U.S. Settlement Plan
Iran is still reviewing a U.S. Proposal to end the war in the Gulf despite an initial response that was negative, a senior Iranian official told Reuters on Wednesday, indicating that Tehran had so far stopped short of rejecting it outright. The BBC noted that oil prices rose above $100 a barrel as the direction of the conflict remained unclear.
White House Stance and Potential for Escalation
White House press secretary Karoline Leavitt stated that U.S. President Donald Trump will hit Iran harder if Tehran fails to accept that the country has been “defeated militarily.” Iranian officials have publicly scorned the prospect of any negotiations with the Trump administration. However, a delay in delivering a formal response to Pakistan, which delivered a 15-point proposal on behalf of Washington, suggests that some figures in Tehran may be considering it.
Impact on Global Oil Supply
The war has significantly impacted global energy markets. The Politico reported that Iran has effectively blocked the Strait of Hormuz, a critical waterway through which approximately 20% of the world’s oil and liquefied natural gas passes daily. Shell CEO Wael Sawan warned that oil shortages could hit Europe in April. The International Energy Agency has called the situation the biggest-ever oil supply disruption.
Price Fluctuations and Market Outlook
Brent crude futures fell $6.21, or 5.9%, to $98.28 a barrel by 0058 GMT on March 25, 2026, after falling to as low as $97.57, according to Yahoo Finance. Hiroyuki Kikukawa, chief strategist of Nissan Securities Investment, noted that expectations of a ceasefire and profit-taking were leading the market decline, but the outlook remains uncertain. Should fighting resume or pressure to close the Strait of Hormuz intensify, oil prices could surge again.
Key Takeaways
- Oil prices are sensitive to developments in the Middle East conflict and potential negotiations between the U.S. And Iran.
- Iran’s actions regarding the Strait of Hormuz are a major factor influencing global oil supply and prices.
- The U.S. Administration maintains a firm stance, signaling potential escalation if negotiations fail.