Oil prices climbed on Thursday as uncertainty surrounding a fragile two-week ceasefire in the Middle East raised fresh concerns about the movement of energy supplies through the strategic Strait of Hormuz.
Brent crude futures increased by $1.96, or 2.07 per cent, to $96.71 per barrel as of 0325 GMT.
Similarly, West Texas Intermediate crude rose by $2.60, or 2.75 per cent, to $97.01 per barrel.
Both oil benchmarks had fallen below $100 per barrel in the previous trading session. At the time, prices dropped sharply after initial expectations that the ceasefire between the United States and Iran could lead to a reopening of the vital shipping route.
In fact, West Texas Intermediate recorded its largest decline since April 2020 during that session.
However, analysts say traders remain cautious and have not fully removed geopolitical risk premiums from oil prices.
Market participants are still uncertain about the outcome of ongoing negotiations between the United States and Iran, and what those talks might mean for global oil supply.
Founder of oil market analysis firm Vanda Insights, Vandana Hari, said the chances of the shipping route reopening soon remain slim.
“The chances of a meaningful reopening of the Strait of Hormuz any time soon look dim,” Hari said, predicting continued volatility in oil prices.
She added that the behaviour of the oil futures market suggests lingering uncertainty among traders.
“The futures market looks a bit broken,” she said. “Otherwise, prices should have snapped right back to pre-ceasefire levels by now.”
The Strait of Hormuz is one of the world’s most important oil transit routes, handling a significant share of global crude shipments.
Any disruption to the passage typically triggers volatility in global energy markets and raises concerns about supply security.
