Oil prices rise as traders eye fragile US-Iran ceasefire

Oil prices rise as traders monitor tenuous US-Iran ceasefire

Asian markets saw a surge in oil prices on Thursday morning, driven by heightened attention to the precarious US-Iran ceasefire. The agreement, set to last two weeks, faced scrutiny after Israel intensified its strikes on Lebanon, prompting Tehran to signal potential retaliation if the conflict persists.

Strait of Hormuz Disruption

The waterway’s reopening was a key clause of the deal, yet Iran’s naval warnings have cast doubt on its stability. Shipping firms reported that vessels crossing the strait without prior consent risk being targeted, as confirmed by SSY to BBC Verify. Since the agreement’s announcement, only a few ships have traversed the route, far below the pre-war average of 130 daily crossings.

Clearing the accumulated backlog will require at least 10 days, even if traffic returns to normal levels, according to Pole Star Global. The strait’s strategic importance has made it a focal point for global energy markets, with traders gauging its security amid ongoing tensions.

Political Context

The ceasefire was brokered on Tuesday evening Washington time, just before a deadline imposed by President Donald Trump. His threat of “a whole civilisation will die tonight” without a resolution underscored the urgency. However, questions remain about Lebanon’s inclusion in the agreement, as Israel launched its most intense bombardment of the country in the conflict, resulting in 182 casualties.

Hezbollah, an Iran-backed militia, responded by firing rockets at northern Israel, citing ceasefire breaches. This development highlights the fragile nature of the accord and its implications for regional stability. US Vice President JD Vance is set to join Iran in Pakistan for further talks on Saturday.

Price Movements

Global benchmark Brent crude increased by 3.3% to $97.90, while West Texas Intermediate rose 3.2% to $97.55. Prices remain elevated compared to pre-war levels, which were last recorded on 28 February. The agreement’s success hinges on restoring confidence in the strait’s safety and resolving disputes over its terms.

“A whole civilisation will die tonight”