Oil Prices Rebound After Sharp Sell-Off
Oil prices recovered on Thursday following their steepest one-day drop since April 2020, as ongoing disruptions in the Strait of Hormuz and renewed geopolitical tensions in the Middle East raised fresh concerns about global supply.
Brent crude futures for June delivery climbed 2.5% to $97.10 per barrel, while West Texas Intermediate (WTI) rose 2.8% to $97.09 per barrel.
Previous Sell-Off Driven by Ceasefire Optimism
Both oil benchmarks had plunged more than 13% in the previous session, after markets reacted positively to news of a temporary ceasefire between the United States and Iran.
The sharp decline reflected expectations that the Strait of Hormuz would reopen and ease supply constraints.
Strait of Hormuz Disruptions Persist
Despite the ceasefire, the Strait of Hormuz—responsible for transporting roughly 20% of the world’s oil supply—remains largely restricted.
While limited vessel movement has resumed under tight controls, shipping disruptions continue. Iran still maintains significant influence over access and transit through the vital waterway.
Rising Tensions Undermine Ceasefire Stability
Market sentiment was further shaken by intensified Israeli strikes on Lebanon, which threaten the durability of the fragile ceasefire.
Reports suggested that tanker movements were halted again following the attacks, although U.S. officials pointed to early signs of a partial reopening of the strait.
Iran also signaled a tougher stance, stating that peace negotiations with the United States would be “unreasonable” under current conditions, citing violations of the ceasefire terms.
Supply Concerns Remain Despite Temporary Truce
The initial drop in oil prices came after U.S. President Donald Trump announced a two-week ceasefire, fueling hopes of a quick resolution to supply disruptions.
However, analysts warn that the market may have reacted too quickly, as structural damage to infrastructure and supply chains across the region could take months to fully recover.
Inventory Data Adds Mixed Signals
Recent data from the U.S. Energy Information Administration (EIA) showed that crude oil inventories increased by approximately 3.1 million barrels, reaching 464.7 million barrels—contrary to expectations for a slight decline.
At the same time, refined product inventories moved lower:
- Distillate stocks fell by around 3.1 million barrels
- Gasoline inventories declined by about 1.6 million barrels
These mixed signals highlight ongoing uncertainty in the oil market outlook.
