Oil Prices Hold Above $100 Amid Hormuz Disruptions
Oil prices remained elevated above the $100 per barrel level on Wednesday, as ongoing supply disruptions in the Strait of Hormuz kept markets tense. This came despite Donald Trump announcing an indefinite extension of the ceasefire with Iran.
Brent crude, the global benchmark, rose 2.1% to $100.50 per barrel, while U.S. West Texas Intermediate (WTI) gained 2.2% to $91.58 per barrel. Prices were volatile throughout the session, fluctuating between gains and losses before stabilizing higher.
Strait of Hormuz Remains a Critical Bottleneck
Shipping activity through the Strait of Hormuz, a key global energy corridor handling roughly 20% of the world’s oil supply, remains severely restricted. The disruption has continued to support oil prices despite temporary geopolitical easing.
Reports from Iranian state media indicated that vessels in the region were attacked and seized by the Islamic Revolutionary Guards Corps. Additional incidents involving commercial ships were confirmed by U.K. maritime authorities, further escalating concerns over supply security.
Ceasefire Extension Fails to Ease Market Concerns
Trump confirmed the extension of the ceasefire to allow more time for diplomatic negotiations with Iran. Iranian officials acknowledged the move, but uncertainty persists around future peace talks, with both sides hesitating to commit to further negotiations.
The U.S. blockade of Iranian ports also remains in place, adding to tensions. Trump stated that Iran is under significant financial strain and emphasized that reopening the Strait of Hormuz is essential for any meaningful agreement.
Supply Disruptions Continue to Drive Oil Prices
The closure of the Strait has had a significant impact on global energy markets since the conflict began in late February. Limited tanker movement and reduced supply have kept oil prices well above pre-war levels.
The disruption has also contributed to rising fuel costs globally, fueling concerns about inflation and economic growth.
U.S. Inventory Data Signals Tight Supply
Recent data from the American Petroleum Institute showed a larger-than-expected drop in U.S. crude inventories, with a decline of 4.4 million barrels, far exceeding forecasts of a 1 million barrel draw.
This suggests tightening supply conditions, with official government data expected to confirm the trend.
Policy Measures and Market Response
The U.S. is exploring measures to counter rising oil prices, including potential releases from the Strategic Petroleum Reserve. Additionally, reports indicate that the administration may extend waivers allowing foreign-flagged ships to transport fuel between domestic ports to improve supply distribution.
Since the start of the conflict, U.S. gasoline prices have surged by approximately 40%, reflecting the broader impact of supply disruptions on consumers.
