LONDON: Oil prices rose on Thursday as doubts over a fragile U.S.-Iran ceasefire and uncertainty around access to the Strait of Hormuz stoked fears of prolonged disruption to global energy supplies.
Global benchmark Brent crude climbed about 2% to $96.53 a barrel, while U.S. West Texas Intermediate (WTI) gained 2.8% to $97.02, reversing some of the sharp losses recorded earlier in the week.
Prices had fallen after a ceasefire agreement was announced, including provisions to reopen the Strait of Hormuz — a vital shipping lane that carries roughly a fifth of the world’s oil. But renewed geopolitical tensions have since undermined confidence in the durability of the truce.
Fresh Israeli strikes on Lebanon have raised the risk of escalation, prompting Iran to warn of a “regret-inducing response” if the attacks continue.
Former U.S. President Donald Trump said American forces would remain in the region until Iran complies with what he described as a “real” ceasefire, adding to uncertainty over how the agreement will be enforced.
Markets have turned cautious, with traders closely watching signals from Tehran on whether the Strait of Hormuz will remain open and accessible to commercial shipping.
“I think there’s a little bit of nervousness in global markets,” said Victoria Scholar, head of investment at Interactive Investor, noting that uncertainty over the status of the waterway was weighing on sentiment.
Reports suggesting Iran may keep the strait closed in response to the Israeli strikes have heightened concerns over supply flows, reversing earlier optimism triggered by the ceasefire announcement.
Analysts said oil prices remain significantly higher than levels seen before the conflict began in late February, reflecting persistent geopolitical risk in a region central to global energy markets.
“The talks are still fragile,” said Sim Moh Siong, a currency strategist at OCBC, adding that the flow of oil through the strait would remain the market’s primary focus in the coming days.
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Shipping activity has already slowed sharply. Only a limited number of vessels have transited the waterway since the ceasefire was announced, well below the typical daily average of around 130 ships.
Iran’s navy has warned that vessels attempting to cross without authorisation could be targeted, according to shipping brokerage SSY, complicating efforts to restore normal operations.
Maritime tracking firm Pole Star Global estimates it could take at least 10 days to clear the current backlog of ships, even if transit volumes return to normal.
Some countries, including Malaysia, India and the Philippines, have sought to negotiate safe passage for their vessels amid the uncertainty, highlighting the growing concern among major importers over supply security.
Broader financial markets reflected the cautious mood, with Asian equities edging lower. Japan’s Nikkei 225 slipped 0.5%, while South Korea’s Kospi fell 1.8%, as investors weighed the potential economic impact of sustained energy price volatility.
Analysts said damage to oil and gas infrastructure during the conflict could take months to repair, suggesting supply constraints may persist and keep prices elevated over the medium term.
“The relationship between Iran and the U.S. is obviously fragile,” said Danny Price of Frontier Economics, adding that disruptions to supply could last for at least a year.
Uncertainty also remains over the scope of the ceasefire, particularly whether it extends to Lebanon, where Israel carried out its heaviest bombardment of the conflict on Wednesday, reportedly killing more than 180 people.
With tensions still high and key energy routes under threat, traders are likely to remain focused on geopolitical developments as the primary driver of oil markets in the near term.