Oil prices rise amid uncertainty over fragile Middle East ceasefire

Oil prices climbed on Thursday as uncertainty surrounding a fragile two-week ceasefire in the Middle East continued to fuel concerns over restricted energy flows through the Strait of Hormuz, a critical global shipping route.

Brent crude futures increased by $1.96, or 2.07%, reaching $96.71 per barrel, while US West Texas Intermediate (WTI) crude rose by $2.60, or 2.75%, to $97.01 per barrel. The rebound comes after both benchmarks dropped below $100 in the previous session, driven by initial optimism that the ceasefire between the United States and Iran would lead to the reopening of the strait.

However, market sentiment remains cautious. Analysts say traders are hesitant to fully discount geopolitical risks, citing ongoing tensions and lack of clarity on the future of US-Iran negotiations. Vandana Hari, founder of Vanda Insights, noted that the chances of a meaningful reopening of the Strait of Hormuz in the near term appear limited, warning of continued price volatility.

Oil drops below $100 after Iran ceasefire

The Strait of Hormuz, which handles nearly 20% of global oil and gas supply, remains under strain despite the ceasefire. Shipping companies have expressed concerns over security risks, unclear navigation guidelines, and high insurance costs, delaying the resumption of normal transit.

Compounding the situation, regional instability persists. Israeli strikes in Lebanon and reported Iranian attacks on oil infrastructure in neighboring countries have raised doubts about the durability of the ceasefire. Analysts at Standard Chartered highlighted that logistical challenges and security fears are likely to restrict additional energy supply in the coming weeks.

Although Goldman Sachs maintained its longer-term oil price forecasts, it adjusted short-term projections downward, reflecting reduced immediate risk premiums. Still, the outlook remains uncertain as markets closely monitor geopolitical developments and their impact on global energy supply chains.