Oil prices rebounded sharply on Thursday as fading optimism over the reopening of the Strait of Hormuz and rising skepticism about a fragile U.S.-Iran ceasefire rattled global energy markets, fueling fresh supply concerns.
Benchmark crude prices saw strong gains in early trading. Brent crude climbed by $2.60, or 2.74%, to $97.35 per barrel, while West Texas Intermediate (WTI) surged $3.02, or 3.2%, to $97.43 per barrel. The recovery follows a steep sell-off in the previous session that pushed both benchmarks below the critical $100 level.
Market Optimism Fades Quickly
The earlier decline was driven by hopes that easing tensions between the United States, Israel, and Iran would lead to the swift reopening of the Strait of Hormuz—a crucial chokepoint that handles nearly 20% of global oil shipments from key producers such as Saudi Arabia, Iraq, Kuwait, and Qatar.
However, that optimism is now rapidly unraveling.
Fresh geopolitical tensions have emerged after Israel continued military strikes in Lebanon, prompting Iranian officials to question the viability of any lasting peace agreement. The renewed uncertainty has cast doubt on whether oil flows through the region can normalize in the near term.
Shipping and Security Risks Remain High
Despite reports from Iranian media about navigational support and designated safe corridors for vessels, global shipping firms remain cautious. Many are demanding clearer security guarantees before resuming operations through the Strait.
Analysts warn that the situation on the ground remains highly unstable. According to market observers, multiple factors—including security threats, logistical challenges, high insurance costs, and operational disruptions—are likely to delay any meaningful recovery in crude shipments over the coming weeks.
Energy Infrastructure Under Threat
Adding to the volatility, regional energy infrastructure continues to face direct risks. Reports indicate ongoing strikes targeting oil facilities across the Middle East, including a Saudi pipeline previously used to bypass the Strait of Hormuz. Countries such as Kuwait, Bahrain, and the UAE have also reported missile and drone-related incidents.
Outlook: Volatility Set to Continue
Analysts caution that the fragile ceasefire may not hold, particularly amid ongoing military activity involving Israel and Hezbollah in Lebanon. Conflicting signals surrounding the status of the Strait of Hormuz and continued attacks on energy assets are keeping markets on edge.
With supply routes uncertain and geopolitical tensions escalating, oil prices are likely to remain volatile in the near term—leaving investors closely watching every development in one of the world’s most critical energy corridors.
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