Oil Rises Slightly, Ceasefire Extension Hopes Hit by Hormuz Blockade
Oil prices edged higher as market participants weighed signals that the US and Iran could extend a ceasefire to buy more time toward a peace deal, even though a dual blockage in the Strait of Hormuz continues to restrict oil flows. Brent traded above $96 per barrel after barely changing on Wednesday, while WTI hovered near $92.
According to sources familiar with the discussions, Washington and Tehran are considering extending the ceasefire for two weeks. This optimism has helped ease some risk premiums, but the market remains sensitive as a recovery in shipping flows remains unclear and the path to a permanent agreement remains unclear.
In the Strait of Hormuz—the Persian Gulf's link to global markets—movement remains nearly paralyzed as the conflict approaches its seventh week. The US has erected a blockade to cut off Iranian traffic, while Tehran remains closed to most other shipping. The commander of Iran's Joint Military Headquarters warned that no exports or imports would be allowed in the Persian Gulf, Sea of Oman, or Red Sea if the US blockade continues for a long time, while US Defense Secretary Pete Hegseth asserted that the US military is ready to resume fighting whenever President Donald Trump orders.
The conflict-triggered supply shock is adding to inflationary pressures and disrupting growth prospects, and finance officials gathered in Washington are said to be uneasy about the lack of clarity on the next direction. While oil contracts remain about a third higher than before the war, prices are well below their peaks in the early weeks of the conflict; some physical market indicators, including Dated Brent, are also considered to not fully reflect the extent of the crisis. Some market participants believe the physical market is still demanding higher prices, with claims of supply losses of more than 10 million barrels per day a core concern.
The impact is being felt most profoundly in the Asia-Pacific given its dependence on the Persian Gulf, with several countries strengthening emergency measures to secure supplies. Risks are also growing from non-geopolitical factors, including a major fire at the Geelong refinery in Australia that is expected to reduce fuel production, adding another layer of uncertainty to the region's supply balance. (gn)
Source: Newsmaker.id
