Oil prices rose sharply on Thursday, with Brent crude topping $103 and West Texas Intermediate surpassing $94, as diplomatic hopes faded and both Iran and the U.S. continued to choke off traffic through the Strait of Hormuz.
Brent crude futures rose $1.26, or 1.2 percent, to $103.17 a barrel by 06:30 GMT a day after the benchmark settled above $100 for the first time in more than two weeks. West Texas Intermediate followed suit, gaining $1.20, or 1.3 percent, to reach $94.16.
Wednesday’s session had already seen both benchmarks close more than $3 higher, driven by a potent combination of tighter-than-expected fuel inventories in the United States and the deepening impasse in negotiations between Washington and Tehran.
For weeks, Pakistani mediators had managed to keep a fragile ceasefire alive between the two adversaries, coaxing both sides to the table and preventing what many feared would spiral into a full-scale regional war. But as of Thursday, that diplomatic scaffolding is showing severe cracks.
U.S. President Donald Trump extended the ceasefire on Tuesday following a renewed request from Pakistani intermediaries, yet the move was accompanied by his characteristic brinkmanship, with the President once again pulling back at the eleventh hour from threats to strike Iranian power plants and critical bridge infrastructure.
White House Press Secretary Karoline Leavitt confirmed on Wednesday that Trump had not set any end date for the extended ceasefire, leaving markets in a state of unnerving uncertainty.
“The oil market is repricing expectations with little sign of progress in finding a resolution in the Persian Gulf,” analysts at ING wrote in a note to clients Thursday morning. “Hopes for a resolution are fading as peace talks stall. In addition, Iran’s seizure of two vessels attempting to transit the Strait of Hormuz suggests disruptions to shipments are set to continue.”
Iranian Parliament Speaker and chief negotiator Mohammad Baqer Qalibaf made Tehran’s position abundantly clear this week, stating publicly that a full and durable ceasefire would only be meaningful if the United States lifted its naval blockade of Iranian seaborne trade. Washington, for its part, has shown no inclination to do so.
At the center of the crisis lies the Strait of Hormuz, the narrow waterway connecting the Persian Gulf to the Gulf of Oman and, ultimately, to global energy markets. Before hostilities erupted on February 28, the strait carried approximately 20 percent of the world’s daily oil supplies, a volume so vast that even partial disruptions send immediate shockwaves through commodity markets worldwide.
Iran seized two commercial vessels attempting to transit the waterway on Wednesday, the latest in a series of maritime interdictions that have steadily choked shipping traffic through the corridor.
Meanwhile, the U.S. Navy continues to enforce a sweeping blockade of Iranian maritime trade, intercepting at least three Iranian-flagged oil tankers in Asian waters over the course of Wednesday alone, diverting them away from positions near India, Malaysia, and Sri Lanka, according to shipping and security sources with direct knowledge of the operations.
The dual-sided stranglehold—Iran gripping the strait from within and U.S. naval forces policing Iranian tankers across Asian sea lanes has created a crisis of confidence in global energy supply chains that no ceasefire extension, however well-intentioned, has yet managed to address.
With Persian Gulf flows severely curtailed, the United States has emerged as the supplier of last resort for energy-hungry economies across Asia and Europe. Total exports of crude oil and petroleum products from the U.S. climbed by 137,000 barrels per day in the most recent reporting period, reaching a record 12.88 million barrels per day, as allies sought to insulate themselves from the ongoing disruption.
The surge in exports is a double-edged sword for American consumers and businesses. On one hand, it reflects enormous demand for U.S. energy on the world stage and supports domestic production economics. On the other hand, it contributes to tighter domestic supply conditions in refined products, a dynamic that was laid bare in Wednesday’s Energy Information Administration inventory report.
U.S. crude stockpiles rose by 1.9 million barrels against analyst expectations for a 1.2 million-barrel draw, a modest buffer. But gasoline inventories plunged by 4.6 million barrels, nearly three times the 1.5 million-barrel drawdown analysts had forecast, while distillate stockpiles, which include diesel and jet fuel, fell by 3.4 million barrels, exceeding the expected 2.5 million-barrel decline. The data underscored a market that is simultaneously flush with raw crude yet critically short of the refined fuels that power economies at the street level.
The timing could scarcely be more fraught. With the Northern Hemisphere summer driving season approaching and aviation demand recovering, any sustained elevation in gasoline and distillate prices carries real economic consequences for consumers from Lagos to Los Angeles.
Veteran energy traders note that the market is no longer merely reacting to daily headlines; it is now factoring in a structural premium for geopolitical risk that may not unwind quickly, regardless of how the current diplomatic episode resolves.
What is clear, for now, is that barrels moving through the Strait of Hormuz, or conspicuously not moving, will continue to set the price that the world pays to keep its lights on, its engines running, and its economies moving. And with both Tehran and Washington showing little willingness to blink, that price appears headed in only one direction.
WHAT YOU SHOULD KNOW
The Iran-U.S. conflict has placed the Strait of Hormuz, the artery through which one-fifth of the world’s daily oil supply flows, under a dangerous dual siege, and global energy markets are paying the price.
With peace talks stalled, naval standoffs intensifying, and no ceasefire deadline in sight, oil prices are climbing sharply and showing no signs of retreat.
Until diplomacy replaces brinkmanship in the Persian Gulf, consumers worldwide should expect to feel the squeeze at the pump and in everything that depends on energy to move, grow, or function.
