Oil Prices Surge Over $97 on Strait of Hormuz Tensions

Oil prices surged sharply higher Thursday, with West Texas Intermediate crude closing above $97 per barrel, as escalating tensions in the Iran conflict renewed fears over the security of Middle Eastern oil shipments. According to live price data, WTI settled at $97.12, a gain of $4.16 or 4.48%. The global benchmark Brent crude rose to $106.51, up $4.60. The price for Bakken crude at the Clearbrook, Minnesota, hub traded at a discount of $3.42 per barrel versus WTI.

The immediate catalyst for the jump was rising geopolitical risk, as reported by Rigzone. Threats to flows through the Strait of Hormuz, a critical chokepoint for global seaborne oil trade, spurred the buying. The conflict in Iran has been a primary driver of volatility in crude markets since late February.

The high-price environment is already shaping activity in the Bakken. According to a report from Bing News citing the North Dakota Department of Mineral Resources, the state's crude output is set to climb in the coming months as operators respond to surging prices. Director Nathan Anderson stated that operators who had previously curtailed or shut-in production have been bringing it back online since the Iran conflict began.

However, the report highlights a cautious approach to new drilling. Anderson noted that while there are currently 10 hydraulic fracturing crews operating in the state, with one operator set to add another rig and crew in July, many are hesitant to significantly ramp up drilling rig counts due to uncertainty over the war's duration and ongoing price volatility. Energy companies are looking at futures prices, which for delivery six months from now were trading around $76.50 as of Tuesday, to make long-term investment decisions.

Instead, operators are focusing on optimizing existing wells. Anderson reported a 13% increase in the deployment of workover rigs in North Dakota, from 110 to 125. These rigs are used for maintenance and well optimization rather than drilling new ones. This strategy allows producers to capitalize on current high prices without making major new capital commitments amid the volatility.

North Dakota's oil production, which makes it the third-largest oil-producing state in the U.S., rose by 4,000 barrels per day to 1.13 million bpd in February, according to the latest state data. March production is expected to show a further increase. Since the Iran war began, U.S. crude futures have swung between a high of $119.48 on March 9 and a low of $69.20 on March 2, illustrating the extreme volatility that is tempering aggressive expansion plans.

For Bakken operators and royalty owners, Thursday's price surge reinforces a favorable near-term revenue outlook, driven by geopolitical premiums. The active use of workover rigs suggests companies are prioritizing cash flow from existing assets. The Bakken differential of -$3.42 indicates the local grade is closely tracking the rally in the benchmark, ensuring the high prices are translating directly to wellhead economics.