Oil Prices Surge Past $105 as US-Iran Talks Stall and Hormuz Tensions Rise

TLDR

• Oil briefly topped $105 a barrel Thursday as tensions in the Strait of Hormuz escalated
• Iran’s Revolutionary Guard attacked three ships in the strait Wednesday
• Brent crude settled above $100 for the first time since the ceasefire began
• The US extended its ceasefire but kept its naval blockade on Iranian ports in place
• Talks between the US and Iran have stalled, with no new meeting scheduled

Oil prices jumped above $105 a barrel on Thursday as fighting resumed in the Strait of Hormuz, just hours after the US said it was extending a ceasefire with Iran.

Iran’s Islamic Revolutionary Guard Corps attacked three commercial ships in the strait on Wednesday. The attacks came shortly after President Donald Trump announced the truce agreed on April 7 would stay in place indefinitely.

Brent crude futures rose 1.4% to $103.36 a barrel early Thursday. West Texas Intermediate futures also rose 1.4%, reaching $92.96. Brent had jumped as much as 4.2% earlier in the session before pulling back on unconfirmed reports of explosions inside Iran.

The Strait of Hormuz handles around 20% of the world’s oil supply. Since fighting began in late February, the near-closure of the strait has sharply cut oil flows from major Gulf producers.

The US has maintained a naval blockade on ships going to and from Iranian ports. Iran’s Foreign Minister Abbas Araghchi called the blockade a violation of the ceasefire agreement.

Traffic through the strait effectively stopped on Thursday. Only one bulk carrier was seen moving through the waterway.

Talks at a Standstill

Washington and Tehran are deadlocked on several issues, including Iran’s nuclear program and Israel’s invasion of Lebanon.

Iranian President Masoud Pezeshkian said he welcomes talks but called the “blockade and threats” the main obstacles to diplomacy. Tehran says it has no plans to join negotiations in the near term.

Mediators are reportedly still pushing for peace talks as early as Friday, according to the Wall Street Journal. But no meeting has been confirmed.

Supply Disruption Weighing on Markets

Brent has risen almost 13% over the last three sessions alone. Analysts say the market is beginning to price in a longer disruption rather than a quick resolution.

US oil inventory data published Wednesday by the Energy Information Administration showed declines across all major refined product categories.

The world has been leaning on US supplies to offset Middle East disruptions. That rising demand pushed total US oil and fuel exports to a fresh record, according to the agency.

On Thursday, just one vessel was seen transiting the Strait of Hormuz, with none observed entering the waterway.

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