Oil prices closed modestly higher on Thursday but remained below $100 per barrel for a second consecutive session, as markets balanced a fragile Middle East ceasefire against ongoing disruptions to energy flows. Brent crude settled up $1.17, or 1.2%, at $95.92 per barrel after earlier rising above $99. U.S. West Texas Intermediate (WTI) gained $3.46, or 3.7%, to close at $97.87, well off intraday highs near $102.70. Both benchmarks had fallen sharply in the prior session on optimism surrounding a potential reopening of the Strait of Hormuz.
Early in the session, prices rallied more than 5% amid concerns that the ceasefire between the U.S. and Iran may not hold, particularly as restrictions on shipping through the Strait of Hormuz persisted. Sentiment later softened after signs of broader regional de-escalation, including plans for direct negotiations involving Lebanon.
Despite the ceasefire, tanker traffic through the Strait remains significantly constrained, running at a fraction of normal volumes as Iran continues to exert control over transit conditions. The waterway, which typically handles around 20% of global oil and gas flows, remains a central factor in market direction.
Adding to supply concerns, reports of damage to Saudi energy infrastructure have raised fresh questions about export capacity. Disruptions to both production and key pipeline routes suggest that even if maritime flows resume, alternative supply channels may remain limited in the near term.
The market continues to grapple with the reality that risks to supply are unlikely to dissipate quickly. Even with a formal ceasefire in place, elevated security concerns, potential mine threats, and higher insurance and freight costs are expected to weigh on the pace of normalization.
Regional instability remains a key overhang, with continued reports of strikes and infrastructure attacks underscoring the fragility of the current environment.
Reflecting the shift in near-term expectations, some market forecasts have been revised lower, with projections now pointing to crude prices averaging in the high-$80s to low-$90s range in the coming quarter, assuming a gradual recovery in supply flows.
Overall, while prices have pulled back from recent highs, the market remains highly sensitive to geopolitical developments, with volatility likely to persist as clarity around supply restoration and ceasefire durability evolves.