Oil prices rose nearly five per cent 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 $4.41, or 4.7 per cent, at $99.14 a barrel at 14:49 GMT (10:49 ET), while US West Texas Intermediate crude rose $7.57, or eight per cent, 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.
"Crude futures are taking back some of yesterday’s losses as the Strait of Hormuz remains with just a small fraction of traffic, much less than the market anticipated yesterday," Dennis Kissler, senior vice president of trading at BOK Financial.
"The ceasefire agreements are in question as Israel had continued to strike Lebanon and Vice President Vance is enroute to the Middle East to continue the talks," Kissler added.
The Hormuz waterway connects supply from Persian Gulf producers such as Iraq, Saudi Arabia, Kuwait and Qatar to global markets, and typically carries about 20 per cent of global oil and gas supply.
Ship traffic through the Strait of Hormuz stood at well below 10 per cent of normal volumes on Thursday despite a US-Iran ceasefire as Tehran asserted its control by warning ships to keep to its territorial waters. Prices for some physical oil grades hit fresh all-time highs on Thursday as the crisis showed little signs of abating.
Traffic through the critical strait has remained at a virtual standstill, with little movement since the US-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 at 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.
Crude loadings at Saudi Arabia's Red Sea port of Yanbu have continued despite an Iranian attack on Wednesday on the country's East-West Pipeline, sources at two buyers from the port and a third trading source told Reuters on Thursday.
Kuwait, Bahrain and the UAE also reported missile and drone attacks by Iran.
The ceasefire led Goldman Sachs to trim its second-quarter 2026 forecasts for Brent and US crude to $90 and $87 a barrel, respectively, from previous forecasts that Brent and West Texas Intermediate oil prices would average $99 and $91 a barrel, respectively.
(Reporting by Stephanie Kelly in London, Mohi Narayan in New Delhi, Sam Li and Lewis Jackson in Beijing; Editing by Bernadette Baum, Elaine Hardcastle, Philippa Fletcher)
