Oil futures recovered ground on Thursday after the market endured its steepest single-session decline since April 2020. Continued interference with shipping through the Strait of Hormuz and renewed tensions in the Middle East lifted prices from the prior session’s rout.
As of 20:12 ET (00:12 GMT), Brent futures for June delivery were trading up 2.5% at $97.10 per barrel. U.S. West Texas Intermediate crude futures climbed 2.8% to $97.09 per barrel.
Both internationally referenced benchmarks had plunged by more than 13% in the previous session, a move driven by market optimism after an announced ceasefire. The rebound came amid reports that the Strait of Hormuz - a critical shipping corridor that handles roughly one-fifth of global oil flows - remained effectively constrained despite the tentative U.S.-Iran ceasefire.
Officials and ship reports indicated that vessel traffic through the strait has resumed only in limited, tightly controlled form. Nonetheless, disruptions persist because Iran continues to exercise significant control over transit and access, according to those reports.
Market sentiment was further unsettled by a wave of Israeli strikes on Lebanon that followed the ceasefire announcement. Those strikes prompted reports that tanker passage through the strait had been halted, even as U.S. officials described early signs of a partial reopening.
In Tehran, Iranian authorities described any prospect of peace talks with the United States as "unreasonable" in the wake of the latest strikes, saying the attacks breached the terms of the newly declared ceasefire.
The oil market had collapsed on Wednesday after U.S. President Donald Trump disclosed a two-week ceasefire with Iran, a development that had led traders to hope the Hormuz chokepoint might soon reopen and ease supply constraints. Some analysts cautioned, however, that the market’s initial reaction could have been premature because structural damage to regional supply chains and infrastructure may take months to repair.
Compounding the geopolitical drivers, data from the Energy Information Administration released on Wednesday showed U.S. crude stockpiles rose by about 3.1 million barrels to 464.7 million barrels in the latest reporting week, surprising markets that had expected a modest draw. At the same time, refined product inventories contracted - distillate stocks fell by roughly 3.1 million barrels and gasoline inventories declined by about 1.6 million barrels.
The combination of disrupted shipping through a key oil artery, renewed regional hostilities, and mixed U.S. inventory data left traders navigating a volatile set of signals. Prices moved back up on Thursday as the prospect of constrained seaborne flows and the risk that the fragile truce could break down outweighed the previous session’s optimism.
Key points
- Oil futures recovered after a more than 13% one-day drop; Brent rose to $97.10 and WTI to $97.09.
- Shipping through the Strait of Hormuz remains limited and tightly controlled despite a tentative U.S.-Iran ceasefire; Iran retains substantial control over transit.
- Israeli strikes on Lebanon threatened to undermine the ceasefire, with reports of halted tanker passage and U.S. indications of a partial reopening.
Sectors impacted
- Energy sector - producers and traders face price volatility driven by supply-route uncertainty.
- Shipping and maritime services - vessel movements through a critical corridor are restricted.
- Refining and fuels markets - crude and refined product inventories showed divergent trends that affect refining margins and supply availability.
Risks and uncertainties
- Ongoing control of transit through the Strait of Hormuz by Iran presents a continued risk to seaborne crude flows, affecting global oil supply.
- Escalation from Israeli strikes on Lebanon could undermine the fragile ceasefire and prompt further disruptions to regional infrastructure and shipping.
- Structural damage to supply chains and infrastructure in the region may take months to repair, prolonging elevated volatility and supply tightness.