Oil prices climbed in early Asian trade on Thursday as investors eyed the fragile U.S.-Iran ceasefire amid fresh Middle East flare-ups.
Brent crude rose 2.2 per cent to $96.70, while West Texas Intermediate advanced 2.8 per cent to $96.90. Both benchmarks remain well above pre-war levels from before the conflict erupted on 28 February.
The two-week truce, announced Tuesday evening in Washington, promises safe passage through the Strait of Hormuz, a chokepoint for nearly 20 per cent of global oil supplies according to the U.S. Energy Information Administration.
Yet Israel’s deadly strikes on Lebanon have tested the deal, prompting Tehran to threaten a “regret-inducing response” if attacks continue. Oil prices had plunged the previous day on initial truce news.
Iran’s navy has warned ships in the Gulf that unauthorised crossings “will be targeted and destroyed,” verified by shipping broker SSY. Traffic has dwindled to a handful of vessels daily, far below the pre-war average of 130. Maritime tracker Pole Star Global estimates at least 10 days to clear the backlog even if flows resume normally. Countries like Malaysia, India, and the Philippines have negotiated exemptions for their fleets in recent weeks.
OCBC analyst Sim Moh Siong attributes the price rebound to perceptions that U.S.-Iran talks are “still fragile,” with Hormuz flows now in sharp focus alongside Tehran’s vague oversight plans.
Danny Price of Frontier Economics describes the bilateral ties as “obviously fragile” and forecasts elevated prices for at least a year as damaged facilities undergo repairs. The International Energy Agency warns prolonged disruptions could push crude towards $110 a barrel, fuelling worldwide inflation.
The truce dodged a midnight deadline set by President Donald Trump, who stated “a whole civilisation will die tonight” without agreement. Debate rages over Lebanon’s inclusion after Israel’s heaviest bombardment yet killed 182 people. Hezbollah retaliated with rockets into northern Israel, citing ceasefire violations.
U.S. Vice President JD Vance heads to Pakistan on Saturday for talks with Iran. Asian stocks slipped Wednesday, with Japan’s Nikkei down 0.5 per cent and South Korea’s Kospi off 1.2 per cent. OPEC+ output curbs compound supply worries, and Goldman Sachs flags risks of European fuel shortages by summer.