Oil prices rose on Thursday amid investor concerns that Middle East supply may not fully resume, as doubts persist over the durability of the two-week ceasefire between the United States and Iran and continued restrictions on the vital Strait of Hormuz.
As of 00:48 GMT, Brent crude futures increased by $2.60, or 2.74%, to $97.35 per barrel. U.S. West Texas Intermediate crude rose by $3.02, or 3.2%, to $97.43 per barrel.
Both benchmark crudes had fallen below $100 per barrel in the previous session, with West Texas Intermediate recording its largest drop since April 2020, driven by expectations that the ceasefire would lead to the reopening of the Strait of Hormuz.
This waterway connects supplies from Gulf producers such as Iraq, Saudi Arabia, Kuwait, and Qatar to global markets, with around 20% of the world’s oil supply typically passing through it.
However, uncertainty remains over the ceasefire, especially as Israel continued its strikes on Lebanon on Wednesday, prompting Iran to say it would be “illogical” to proceed with talks for a permanent peace agreement.
Shipping companies said on Wednesday they need greater clarity regarding the ceasefire terms before resuming transit through the Strait of Hormuz. Iranian media reported that Iran has published navigation maps to guide vessels in avoiding mines in the waterway and designated safe passage routes in coordination with the Islamic Revolutionary Guard Corps.
Analysts at Standard Chartered said in a note that “transit through the Strait of Hormuz has not suddenly become risk-free. It remains under Iranian influence.”
They added that “logistical disruptions, security concerns, rising insurance premiums, and operational constraints mean that only limited additional energy supply is likely to flow through the Strait of Hormuz over the next two weeks.”
Oil facilities in the region also remain at risk, as Iran reportedly struck sites in neighboring countries after the ceasefire, including a pipeline in Saudi Arabia used to bypass the Strait of Hormuz, according to a source in the oil sector.
Reuters
