TL;DR
- Oil prices rebounded to nearly $100 per barrel.
- Doubts about the Iran ceasefire are rising.
- Gas prices continue to climb, averaging $4.17 per gallon.
- Ship traffic in the Strait of Hormuz remains low.
- Market volatility is expected to continue.
Hold onto your wallets, folks! Oil prices are making headlines again as they rebound to nearly $100 per barrel, and it’s all thanks to the chaos surrounding the Iran ceasefire. Just two days after President Donald Trump announced the ceasefire, doubts began to swirl like a tornado in a trailer park. With fewer ships than usual transiting the crucial Strait of Hormuz, the market is feeling the heat.
On Thursday, U.S. crude saw a volatile trading session, dipping as low as $95 before bouncing back to almost $103. By the end of the day, it was up more than 5.5%. International Brent crude wasn’t far behind, climbing 3% to around $98. Meanwhile, gas prices are also on the rise, hitting a national average of $4.17 per gallon. Talk about a double whammy!
Analysts at ING commodities noted, “Prices rebounded as fighting in the Middle East continued, and the ceasefire outlook deteriorated, keeping uncertainty around the Strait of Hormuz firmly in focus.” And they’re not wrong. The optimism over the ceasefire has taken a nosedive after reports surfaced that Tehran claimed several terms of the agreement had been breached. The drama just keeps unfolding!
Iranian media reported that the Strait of Hormuz, a vital artery for oil transport, had been closed again following an Israeli strike on Lebanon. Mohammad Bagher Ghalibaf, the speaker of the Iranian Parliament, didn’t hold back, stating, “Ceasefire violations carry explicit costs and STRONG responses.” Talk about a warning shot!
While Iran insists that stopping Israeli strikes in Lebanon is a must for any ceasefire, the U.S. and Israel are playing hardball, saying it’s a separate issue. The U.S. is demanding that the Strait of Hormuz be fully open for business, while Iran wants to control and tax the ships passing through. Can we say messy?
Even Sultan Al Jaber, CEO of the Abu Dhabi National Oil Co., chimed in, saying, “This moment requires clarity. So let’s be clear: the Strait of Hormuz is not open. Access is being restricted, conditioned and controlled.” If that doesn’t scream trouble, we don’t know what does!
Stocks initially took a hit on Thursday morning, but a glimmer of hope appeared when Israeli Prime Minister Benjamin Netanyahu announced that his country was looking to open direct negotiations with Lebanon. This news sent stocks soaring, with the S&P 500 ending up 0.6% and the Dow jumping over 275 points. But don’t get too comfortable; this roller coaster is far from over!
Since the ceasefire was announced, ship traffic in the Strait of Hormuz has been dismal. Just four ships passed through on Wednesday, and that number barely crept up to five on Thursday. For comparison, hundreds of ships used to pass through daily before the conflict erupted. The market is feeling the pinch, and experts predict that without a significant drop in oil prices, gas prices will likely remain high.
As GasBuddy analyst Patrick De Haan put it, “This roller coaster may not be over yet.” So, buckle up, because the ride is just getting started!