ISLAMABAD: Oil prices climbed on Thursday as uncertainty surrounding the fragile Middle East ceasefire and continued restrictions in the Strait of Hormuz raised fears over global energy supplies.
Brent crude futures increased by $1.96, or 2.07%, to reach $96.71 per barrel. US West Texas Intermediate (WTI) crude also rose by $2.60, or 2.75%, to $97.01 per barrel.
The rebound came a day after both oil benchmarks dropped below $100 per barrel. WTI recorded its biggest single-day fall since April 2020 after traders initially believed the two-week ceasefire between the United States and Iran could lead to a reopening of the Strait of Hormuz.
However, analysts now say the chances of a full reopening remain low. Market participants continue to price in the geopolitical risk because there is little clarity on whether negotiations between Washington and Tehran will improve oil flows.
The Strait of Hormuz is one of the world’s most important shipping routes, carrying around 20% of global oil and gas supplies. It links crude exports from Iraq, Saudi Arabia, Kuwait and Qatar to international markets.
Oil market analyst Vandana Hari said a meaningful reopening of the strait is unlikely in the near future. She added that oil prices remain highly volatile because traders are uncertain about the next phase of the Middle East conflict.
Shipping companies also said they need more details about the ceasefire before resuming normal transit through the Strait of Hormuz. Iranian authorities have reportedly issued navigation maps and safe routes for ships to avoid mines in the area.
Analysts at Standard Chartered warned that security concerns, rising insurance costs and operational disruptions will likely keep energy supplies through the Strait of Hormuz limited over the next two weeks.
Meanwhile, Kuwait, Bahrain and the United Arab Emirates reported missile and drone attacks, adding to fears that the conflict could spread further across the Gulf region and continue supporting higher oil prices.
