Crude oil prices advanced Thursday as markets recovered from earlier weakness and tracked fresh developments in the US-Iran standoff. West Texas Intermediate climbed to around $92 per barrel while Brent crude crossed above the $95 threshold, reflecting persistent supply concerns tied to the Strait of Hormuz blockade.
Ceasefire Extension on the Table
Washington and Tehran are weighing an extension of the current two-week ceasefire agreement to allow more time for negotiations, according to reporting from Coin Paper. The White House has expressed optimism about reaching a potential deal, with officials indicating a second round of talks is likely to take place in Pakistan.
Iranian officials have been conducting parallel discussions in Tehran, including meetings intended to relay messages between both sides. These back-channel efforts have contributed to shifting market sentiment in recent sessions, though traders remain cautious about declaring a breakthrough.
Hormuz Blockade Remains in Force
Despite the diplomatic activity, the Strait of Hormuz remains effectively closed under a US naval blockade targeting Iranian ports. The waterway handles a substantial portion of global oil shipments, and disruptions there send immediate shockwaves through energy markets.
Shipping data presents a contradictory picture. US officials maintain they have halted commercial traffic to and from Iranian ports, yet some Iran-linked vessels have continued moving through the strait. This discrepancy raises questions about actual flow volumes, and that uncertainty is keeping volatility elevated.
Iranian officials have warned that an extended blockade could provoke retaliation, potentially affecting operations across the Persian Gulf, the Sea of Oman, and the Red Sea. These threats continue to embed risk premiums in crude valuations.
Military Buildup and Regional Tensions
The Department of Defence plans to deploy thousands of additional troops to the region in coming weeks, according to reports. Israeli airstrikes in southern Lebanon underscore how the broader conflict spans multiple fronts, complicating any assessment of near-term stability.
Separately, a 10-day Israel-Lebanon truce came into effect, with the Lebanese army warning of violations along the border. France and Britain are preparing to lead a 40-nation coalition focused on Hormuz security and post-conflict stabilisation efforts, adding another diplomatic layer to the situation.
Market Outlook
Traders are now tracking two competing forces: diplomatic optimism and escalation risk. The expected second round of US-Iran negotiations will likely address reopening the Strait of Hormuz and Iran's nuclear programme. Progress on either front could rapidly shift market direction.
Oil markets have settled into a narrow but volatile trading range, reacting sharply to each headline. Confirmation of a ceasefire extension and any signs of shipping route reopening would represent the clearest bullish catalysts. Until then, participants are likely to maintain elevated risk premiums amid the unresolved standoff.