WTI crude trades near $99 per barrel after climbing nearly 5%, partially recovering from a 16.4% plunge in the previous session. Brent crude rises more than 4% to move above $99, partially reversing a nearly 13% plunge in the previous session, its steepest single-day drop since 2020. The rebound from both follows a steep selloff in the previous session.
Ceasefire Doubts Spark Oil Rebound
Oil prices moved higher as concerns grew over the stability of the U.S.-Iran ceasefire. Both sides accused each other of violating the agreement, raising doubts about whether the truce can hold.
This tension reversed the optimism that drove the previous selloff. Markets had briefly priced in reduced supply risk after news of a potential deal. However, fresh reports of military activity near the Strait of Hormuz quickly shifted sentiment.
The result? A sharp recovery in crude prices. Traders now weigh the risk of further disruption against the possibility of diplomacy. Can the ceasefire survive these early challenges?
Strait Of Hormuz Disruptions Keep Supply Tight
The Strait of Hormuz remains at the center of the crisis. This key waterway handles about 20% of global oil and gas flows. Any disruption here has an immediate global impact.
Despite the ceasefire agreement, shipping activity remains severely limited. Reports indicate that tanker traffic has faced delays, with only one oil products vessel passing through during the first 24 hours of the truce. Iran has required military coordination for passage, adding another layer of complexity.
This near shutdown has created one of the most significant supply disruptions in recent years. As a result, markets continue to react sharply to every update. If flows do not normalize soon, how will supply chains respond?
At the same time, ongoing Israeli operations in Lebanon have added pressure. Iranian officials argue that these actions fall under the ceasefire terms, while other parties disagree. This disagreement increases uncertainty and keeps tensions elevated.
Market Forces And Demand Signals Support Prices
Beyond geopolitics, other factors have supported the rebound in oil prices. OPEC+ has maintained a cautious production strategy, choosing not to increase supply aggressively. This approach limits available barrels in an already tight market.
Meanwhile, recent data shows a draw in U.S. crude inventories. This decline suggests steady demand, which adds upward pressure on prices. When supply tightens and demand holds firm, markets tend to react quickly.
Prices now approach levels last seen in 2022, highlighting the scale of recent volatility. The rapid swings reflect a market driven as much by headlines as by fundamentals.
Diplomacy Efforts Offer A Narrow Path Forward
While tensions remain high, diplomatic efforts continue behind the scenes. Pakistan has stepped in as a key mediator, helping bring both sides to the negotiating table. Upcoming talks aim to address core issues such as sanctions relief, oil exports, and security guarantees.
Officials from both countries are expected to meet soon, with discussions potentially including sensitive topics like uranium enrichment and regional stability. Analysts note that neither side achieved a decisive outcome during the conflict, which may encourage continued dialogue.
Still, risks remain. Threats from both sides persist, and disagreements over the scope of the ceasefire could derail progress.
