Oil prices rise as traders eye fragile US-Iran ceasefire
Asian markets saw a surge in oil prices during Thursday’s early trading session, driven by heightened attention on the tenuous US-Iran ceasefire. The agreement, which temporarily halts hostilities, faces scrutiny following Israel’s recent attacks on Lebanon. Tehran has issued warnings of a “regret-inducing response” should the strikes persist.
Strait of Hormuz Disruption
Wednesday’s oil price drop was reversed as the two-week ceasefire came under pressure. The accord, which aims to restore the Strait of Hormuz to normal operations, was tested when Iran threatened to target ships navigating the vital waterway. This retaliation followed US-Israeli airstrikes on Iran, causing significant delays in maritime traffic.
Global benchmark Brent crude climbed 3.3% to $97.90, while US West Texas Intermediate gained 3.2% to $97.55. Prices remain elevated compared to pre-war levels, which began on 28 February. The ceasefire was announced on Tuesday evening Washington time, just before a 20:00 EDT (00:00 GMT) deadline set by former President Donald Trump.
“A whole civilisation will die tonight”
Trump’s warning, which spurred the agreement, emphasized the urgency of the deal. A critical condition of the pact is ensuring safe passage for ships through the Strait of Hormuz. However, Iran’s navy has issued a directive to SSY, a shipping brokerage firm, stating that vessels crossing the strait without authorization will face attacks.
Since the ceasefire’s announcement, only a few ships have traversed the waterway, far below the daily average of 130 before the conflict. Maritime tracking firm Pole Star Global estimates it will take at least 10 days to clear the accumulated backlog, even if traffic returns to normal levels. The dispute over Lebanon’s inclusion in the ceasefire adds to the uncertainty, with Israel conducting its most intense bombardment of the region in the war so far, resulting in at least 182 casualties.
Hezbollah, an Iran-backed militia, responded by launching rockets at northern Israel, citing ceasefire violations as justification. US Vice President JD Vance is set to join talks with Iran in Pakistan on Saturday, aiming to solidify the fragile agreement. The outcome of these discussions will be closely monitored as markets assess the stability of the ceasefire.
