Key Points:
- West Texas Intermediate crude hit $101 before settling near $98 a barrel amid ongoing Middle East tensions.
- The Strait of Hormuz remains largely closed, disrupting roughly 20% of global oil and liquefied natural gas supplies.
- Vice President JD Vance will lead a United States delegation to Islamabad on Saturday to negotiate directly with Iranian officials.
- President Donald Trump threatened a massive military escalation if Iran fails to comply with the terms of the fragile ceasefire.
Oil prices crept higher in chaotic trading this week as investors tried to make sense of mixed signals coming from the Middle East. The Strait of Hormuz remains largely blocked, keeping global energy markets on edge. West Texas Intermediate crude for May delivery traded near $98 a barrel, dropping slightly after hitting $101 earlier in the day. Meanwhile, the June contract for Brent crude hovered around $95. Both major benchmarks lost some of their early gains after Israel agreed to hold direct talks with Lebanon. This diplomatic move raised hopes that military strikes might slow down.
Earlier in the week, Israeli attacks on Lebanon prompted Iran to stop oil tankers from moving through the strait. Iranian officials called the strikes on Lebanon a clear violation of the fragile ceasefire agreement. Iranian Parliament Speaker Mohammad-Bagher Ghalibaf stated publicly that the opposing side violated exactly 3 clauses of the truce. Because liquidity in the energy market remains low, oil prices swing wildly every time a new conflicting headline hits the news wires.
Traders feel nervous because the actual flow of fuel through the Strait of Hormuz remains severely restricted. The head of the largest oil company in the United Arab Emirates confirmed that the waterway remains closed, noting that Iran actively restricts safe passage. An Iranian deputy foreign minister told a British news outlet that commercial ships must obtain direct consent from his government before transiting the area. The near-total closure of this critical chokepoint created the biggest oil market supply disruption in history. Before the United States and Israel struck Iran in late February, about 20% of the world’s oil and liquefied natural gas flowed through this specific route.
To resolve the crisis, Vice President JD Vance plans to lead a United States delegation to Islamabad. The team will hold direct talks with Iranian representatives on Saturday morning local time. Despite these upcoming diplomatic meetings, the White House maintains a tough public stance. Press Secretary Karoline Leavitt told reporters on Wednesday that President Donald Trump expects Iran to reopen the Strait of Hormuz immediately.
Trump took to social media to enforce his demands. He warned that United States military personnel and weaponry will stay positioned around Iran until the enemy fully complies with the real agreement. He added that if Iran refuses to follow the rules, the shooting will start again, and the American response will look bigger, better, and stronger than anyone has ever seen before.
On the water, a small glimmer of hope appeared on Thursday. Two fully loaded Chinese oil tankers approached the strait from the Persian Gulf. If they make it through, they will become the very first vessels to cross the waterway since leaders announced the ceasefire. However, port authorities cannot guarantee a successful passage. Traffic levels showed almost zero change over the past 24 hours. The Iranian Ports and Maritime Organization recently announced 2 designated safe routes for vessels entering and exiting the strait. State-run Nour News reported that officials established these specific passageways to help ships avoid hidden sea mines.
Market experts warn that resolving the political dispute will not instantly fix the energy shortage. Rebecca Babin, a senior energy trader at CIBC Private Wealth Group, explained the disconnect between stock tickers and physical barrels. She noted that while financial paper markets price in a full reopening, any actual recovery in fuel flows will happen very slowly. Energy companies reduced output at major oil and gas fields during the conflict, while regional refineries either curtailed production or shut down entirely. Getting those complex facilities back to normal operations will take weeks or even months.
Because local supplies remain incredibly tight, desperate traders look elsewhere for crude. Buyers now pay elevated premiums to secure North Sea oil shipments. Amarpreet Singh, an analyst at Barclays, told clients that the ceasefire announcement failed to lift oil flows through the strait, but traders already priced a quick return to normal into the current market. Singh warned that any potential delay or further military escalation poses upside risks to his firm’s $85 Brent price forecast for 2026.
