Oil prices moved up by about 1 per cent on Thursday amid volatile trading due to the fragile Middle East ceasefire, with Brent crude futures gaining $1.17 or 1.2 per cent to sell at $95.92 a barrel, and the US West Texas Intermediate (WTI) crude futures expanding by $3.46 or 3.7 per cent to $97.87 a barrel.
Initially, prices rose over doubts about the two‑week ceasefire between the United States and Iran, as well as concerns about ongoing restrictions to energy flows through the Strait of Hormuz. The waterway connects supply from Gulf producers such as Iraq, Saudi Arabia, Kuwait and Qatar to global markets, and typically carries 20 per cent of global oil and gas supply.
The ceasefire hadn’t held for 24 hours when Israel continued air strikes on Lebanon, which Iran said was a violation of the deal with America and signalled the shutting down of the Strait of Hormuz again.
However, Israeli Prime Minister Benjamin Netanyahu on Thursday said he had instructed officials to open peace talks with Lebanon, including discussions on disarming Hezbollah.
Ship traffic through the Strait of Hormuz fell to well below 10 per cent of normal volumes on Thursday after Iran asserted control by warning vessels to remain within its territorial waters, and prices for some physical oil grades hit fresh all-time highs.
Shippers on Wednesday said they needed clarity on the terms of the ceasefire before resuming transit through the strait. Iran has issued maps to guide ships around mines and show safe paths for passage.
Concerns over supply disruptions in Saudi Arabia resurfaced as the kingdom’s oil production capacity was reduced by about 600,000 barrels per day and cut throughput on its East‑West Pipeline by roughly 700,000 barrels per day.
Regional oil facilities remain under threat, with Iran striking sites in nearby countries after the ceasefire. Kuwait, Bahrain and the UAE also reported missile and drone attacks by Iran.
The ceasefire has led Goldman Sachs to trim its second‑quarter 2026 forecasts for Brent and US crude to $90 and $87 a barrel, respectively, from previous forecasts that Brent and WTI oil prices would average $99 and $91 a barrel, respectively. It also forecast that if the Strait of Hormuz remains essentially closed to normal traffic for another month, Brent Crude prices would average more than $100 per barrel in the second half of 2026 and throughout the year.