Oil Rises After Biggest Drop Since 2020 as Iran Accuses US of Ceasefire Breach
Quick Reads
- Oil prices resumed gains on Thursday after Iran accused the United States of violating the two-week ceasefire deal, raising doubts about the durability of the truce.
- Brent crude rose 2.08% to $96.83 a barrel, while WTI added 2.86% to trade around $97, recovering from the biggest single-day drop since 2020.
- Iran’s parliamentary speaker said three elements of its 10-point truce proposal had been breached, including ongoing Israeli strikes in Lebanon.
- The Strait of Hormuz remains largely blocked, with Iran’s navy warning that vessels crossing without permission “will be targeted and destroyed.”
Oil prices climbed on Thursday after Iran accused the United States of violating a fragile two-week ceasefire agreement, reigniting concerns that the Middle East conflict could escalate again and disrupt energy supplies from the region.
International benchmark Brent crude futures for June delivery added 2.08% to $96.83 a barrel, while US West Texas Intermediate crude futures for May rose 2.86% to $97.27. The gains came a day after WTI posted its biggest single-day drop since April 2020, plunging 14% as markets initially priced in a de-escalation following Tuesday’s ceasefire announcement.
Mohammad Bagher Ghalibaf, Iran’s parliamentary speaker, said on Wednesday that Washington had breached the terms of the ceasefire deal. “The deep historical distrust we hold toward the United States stems from its repeated violations of all forms of commitments a pattern that has regrettably been repeated once again,” Ghalibaf said in a statement posted on social media.
He specified three elements of Iran’s 10-point truce proposal that had been violated: Israel’s ongoing strikes in Lebanon, a drone entering Iranian airspace, and what he described as the denial of Tehran’s right to enrich uranium. The Israeli bombardment of Lebanon on Wednesday was the heaviest of the conflict so far, killing at least 182 people, according to reports. Hezbollah, the Iran-backed militia, said it had fired rockets at northern Israel in response.
US Vice President JD Vance responded to the allegations while on a trip to Hungary. “Ceasefires are always messy,” Vance said, addressing the reported drone incident. He added that Washington maintains Iran should not be allowed to enrich uranium, and said any ceasefire covering Lebanon had not been included in the agreement. Vance is scheduled to lead a US delegation to Islamabad for direct talks with Iran on Saturday.
The near-halt of traffic through the Strait of Hormuz through which about a fifth of the world’s crude and liquefied natural gas flowed before the war began on February 28 has caused the biggest-ever oil market disruption. Despite the ceasefire announcement, the strait remains largely blocked. Iran’s navy has warned that any vessels seeking to cross without permission “will be targeted and destroyed,” shipping brokerage firm SSY confirmed. Only a handful of ships have crossed since the deal was announced, well below the pre-war rate of some 130 vessels daily.
Even once the strait transit picks up, the return of energy supplies will not be instant. Output has been reduced at oil and gas fields, while refineries have curtailed production or shut down. Some of those will take weeks or possibly longer to return to normal. Maritime tracking firm Pole Star Global estimates it will take a minimum of 10 days to clear the existing backlog of vessels, even if the strait resumes its usual volume of shipping.
“This is not over just yet,” said Dennis Kissler, senior vice president for trading at BOK Financial Securities. “We will need to see a full opening of the strait with no obstacles before we see crude prices in the low US$80s for WTI. And I do not see that in the next two weeks.”
Analysts say the ceasefire’s fragility leaves the market on edge. “I think there’s a little bit of nervousness in global markets,” Victoria Scholar, head of investment at Interactive Investor, told the BBC. “Markets are giving back some gains… and I think that reflects a lot of uncertainty over whether the Strait of Hormuz is actually open.”
Now that oil is below $100 per barrel, refiners should “use this window to resume more opportunistic buying,” said Janiv Shah, vice president of commodity markets at Rystad Energy. “However, the transition period itself could present the next challenge. If refiners delay purchases in anticipation of further price declines while physical flows remain constrained, product tightness could worsen even amid de-escalation.”
Market Snapshot
- Brent crude (June): $96.83/barrel, up 2.08%
- WTI crude (May): $97.27/barrel, up 2.86%
- Wednesday’s WTI drop: 14% (largest since April 2020)
- Strait of Hormuz pre-war traffic: ~130 vessels/day
- Strait of Hormuz current status: Largely blocked; backlog of at least 10 days
- Next talks: US and Iran to meet Saturday in Pakistan
