Oil rebounds as fragile ceasefire, Hormuz concerns keep supply risks elevated

LONDON: Oil prices rose over 3% on Thursday as doubts over a fragile two-week Middle East ceasefire raised concerns that energy flows through the crucial Strait of Hormuz will remain restricted, with shippers hesitant to resume transit.

Brent crude futures were up $3.41, or 3.6%, at $98.16 a barrel at 1244 GMT, while U.S. West Texas Intermediate (WTI) crude rose $4.74, or 5%, to $99.15 a barrel.

Both benchmarks fell below $100 per barrel in the previous trading session, with WTI recording its biggest decline since April 2020, on optimism the ceasefire would result in a reopening of the strait.

However, Israel bombed more targets in Lebanon on Thursday, putting the ceasefire in further jeopardy after its biggest attacks of the war on its neighbour killed more than 250 people and threatened to torpedo Donald Trump’s truce from the outset.

Market participants were unwilling to fully strip out the geopolitical risk premium, analysts said, adding there was no clarity on what U.S.-Iran talks would mean for oil flows.

“You can have peace negotiations left, right and centre between the fighting regions, but as long as the strait does not supply any more crude or LNG, you will not have lower energy prices,” said SEB Research analyst Ole Hvalbye. “The fall yesterday was quite an overreaction.”

Also read: Iranian delegation to reach Islamabad Thursday, Iran’s ambassador to Pakistan says

The Hormuz waterway connects supply from Gulf producers such as Iraq, Saudi Arabia, Kuwait and Qatar to global markets, and typically carries about 20% of global oil and gas supply.

‘Risks won’t disappear overnight’

One oil products tanker and five separate dry bulk carriers have sailed through the Strait of Hormuz in the past 24 hours despite Iran and the United States reaching a two-week ceasefire deal, according to analysis of data from ship trackers.

Traffic through the critical strait has remained at a virtual standstill, with little movement since the U.S.-Israeli war on Iran began on February 28 and sailings averaging a few vessels daily, according to data from Kpler, Lloyd’s List Intelligence and Signal Ocean.

“Even if shipments resume, the risks won’t disappear overnight,” said Susannah Streeter, chief investment strategist, Wealth Club. “Tankers may be forced to navigate mined waters and a heightened military presence, all of which will keep insurance premiums high and freight costs elevated.”

Shippers on Wednesday said they needed clarity on terms of the ceasefire before resuming transit through the Strait of Hormuz. Iran has issued maps to guide ships around mines and showing safe paths for passage, Iranian media reported.

Regional oil facilities remain under threat, with Iran striking sites in nearby countries after the ceasefire, including a pipeline in Saudi Arabia that has been used to bypass the blockaded Strait of Hormuz, according to an oil industry source.

Also read: Trump sending VP Vance to Pakistan for Iran talks on Saturday: White House

Kuwait, Bahrain and the UAE also reported missile and drone attacks by Iran.

Meanwhile, Goldman Sachs trimmed its second-quarter 2026 forecasts for Brent and U.S. crude to $90 and $87 a barrel, respectively, after the ceasefire.

Previously, the bank forecast Brent and West Texas Intermediate (WTI) oil prices to average $99 and $91 a barrel, respectively.