Oil prices experienced a notable surge on Thursday, approaching the $100-per-barrel threshold due to fresh disruptions in the Strait of Hormuz and increasing doubts regarding the fragile US-Iran ceasefire, which revived concerns about oil supply.
Brent crude increased by 2.48% to reach $97.10 per barrel, while US West Texas Intermediate (WTI) saw a 3.43% climb to $97.65, sharply reversing the previous session’s decline where prices had fallen to approximately $90.
The rapid shift in sentiment within a day underlines the impact of geopolitical risks resurfacing as a major concern.
INTENSIFIED DISRUPTIONS IN HORMUZ RAISE SUPPLY ANXIETIES
Vessel traffic through the Strait of Hormuz has been disrupted again, leading to tankers that had begun to leave the area now reversing their course.
Although movement briefly resumed following the ceasefire announcement, the situation quickly deteriorated.
Shipping data reveals that more than 1,000 vessels, with nearly 200 loaded tankers, are currently present in the region, and even under normal circumstances, it would take weeks to clear the backlog.
Any interruption in the strait, a critical global chokepoint for oil, could lead to further delays and heightened expectations of tightening global supply.
UNCERTAIN CEASEFIRE SUSTAINABILITY
The ceasefire that briefly soothed the markets is now displaying signs of strain, with escalating tensions in the West Asia region casting doubts on its durability.
This has reintroduced a geopolitical risk premium into crude prices, reversing the positive outlook that had driven prices lower just a day earlier.
For major oil-importing nations like India, the resurgence in oil prices poses a significant concern. Elevated prices could trigger inflation, impact currency values, and put pressure on corporate profits, causing ripple effects across financial markets.
Given the evolving situation, oil markets are expected to remain highly volatile. If disruptions in the Strait of Hormuz persist or if the ceasefire weakens further, oil prices could approach or exceed the $100 threshold once again.