Oil prices rise as traders eye fragile US-Iran ceasefire
Oil prices rise as traders eye fragile US-Iran ceasefire
Asian morning trading sessions saw a surge in global oil prices on Thursday, driven by market participants closely following the status of the precarious US-Iran truce. The two-week conditional agreement, which hinges on several key terms, faced scrutiny after Israel escalated its military actions against Lebanon. Tehran issued a warning that it would respond with a “regret-inducing reaction” if the strikes persisted.
Wednesday’s oil price decline came amid the announcement of the deal, which aimed to restore normalcy to the vital Strait of Hormuz. Iranian forces had previously disrupted maritime traffic through the strait, threatening to strike vessels attempting to cross without approval. This disruption was a direct retaliation against US and Israeli airstrikes targeting Iran.
Global benchmark Brent crude climbed 3.3% to $97.90, while US-based West Texas Intermediate rose 3.2% to $97.55. Prices remain significantly elevated compared to pre-war levels, which began on 28 February. The ceasefire was declared on Tuesday evening in Washington, just before a 20:00 EDT deadline set by former President Donald Trump. He had warned that “a whole civilisation will die tonight” if no resolution was reached.
One critical condition of the agreement was ensuring safe passage for ships through the Strait of Hormuz. However, Iran’s navy has issued a warning to vessels in the Gulf, stating that any crossing without permission “will be targeted and destroyed,” as confirmed by shipping firm SSY to BBC Verify. Since the deal was announced, only a few ships have navigated the waterway, far below the typical 130 daily transits before the conflict began.
Maritime tracking group Pole Star Global estimates that clearing the existing backlog of ships will require at least 10 days, even if normal traffic resumes. Tensions also persist over whether Lebanon is fully included in the ceasefire. On Wednesday, Israel conducted its most intense bombardment of the country in the conflict, killing at least 182 individuals. In response, Hezbollah launched rocket attacks on northern Israel, claiming the action was retaliation for alleged ceasefire breaches.
US Vice President JD Vance is set to engage in talks with Iranian representatives in Pakistan on Saturday, seeking to solidify the agreement and address ongoing concerns. The situation remains fluid, with market reactions tied to the stability of this diplomatic arrangement.
