NEW YORK, – Oil prices closed up 1% but settled below $100 for the second straight session on Thursday in volatile trading as a fragile Middle East ceasefire held and Israel said it would start direct negotiations with Lebanon as soon as possible.
Earlier in the session, doubts over the durability of the two‑week ceasefire between the United States and Iran stoked concerns about ongoing restrictions to energy flows through the Strait of Hormuz, driving prices up more than 5%. Those gains were later pared after Israeli Prime Minister Benjamin Netanyahu said he had instructed officials to open peace talks with Lebanon, including discussions on disarming Hezbollah.
Brent crude futures settled up $1.17 or 1.2%, at $95.92 a barrel, after hitting a session high of $99.50. U.S. West Texas Intermediate crude closed up $3.46 or 3.7% at $97.87 a barrel, well below its intraday peak of $102.70.
Both benchmarks fell below $100 per barrel in the previous trading session, with WTI recording its biggest decline since April 2020, on optimism that the ceasefire would result in a reopening of the strait.
But questions have lingered over the ceasefire’s effectiveness as ship traffic through the Strait of Hormuz fell to well below 10% of normal volumes on Thursday after Iran asserted control by warning vessels to remain within its territorial waters and prices for some physical oil grades hit fresh all-time highs.
The Hormuz waterway connects supply from Gulf producers such as Iraq, Saudi Arabia, Kuwait and Qatar to global markets, and typically carries 20% of global oil and gas supply.
Concerns over supply disruptions in Saudi Arabia resurfaced after state news agency SPA said late on Thursday that attacks had reduced the kingdom’s oil production capacity by about 600,000 barrels per day and cut throughput on its East‑West Pipeline by roughly 700,000 bpd. The report lifted Brent and WTI more than $1 a barrel in post‑settlement trading as markets digested the news.
“Now with Saudi infrastructure hit, the market is realizing that even if Hormuz opens tomorrow, Saudi export flexibility is damaged for weeks,” said Shohruh Zukhritdinov, a Dubai-based oil trader.
Israel bombed more targets in Lebanon on Thursday, putting the ceasefire in jeopardy.
“Crude futures are taking back some of losses as the Strait of Hormuz remains with just a small fraction of traffic, much less than the market anticipated ,” said Dennis Kissler, senior vice president of trading at BOK Financial.
‘RISKS WON’T DISPEAR OVERNIGHT’
“Even if shipments resume, the risks won’t disappear overnight,” said Susannah Streeter, chief investment strategist at Wealth Club. “Tankers may be forced to navigate mined waters and a heightened military presence, all of which will keep insurance premiums high and freight costs elevated.”
Shippers on Wednesday said they needed clarity on terms of the ceasefire before resuming transit through the strait. Iran has issued maps to guide ships around mines and show safe paths for passage, Iranian media reported.
Regional oil facilities remain under threat, with Iran striking sites in nearby countries after the ceasefire, including a pipeline in Saudi Arabia that has been used to bypass the blockaded waterway, according to an oil industry source.
Crude loadings at Saudi Arabia’s Red Sea port of Yanbu have continued despite an Iranian attack on Wednesday on the East-West Pipeline, sources at two buyers from the port and a third trading source told Reuters on Thursday.
Kuwait, Bahrain and the UAE also reported missile and drone attacks by Iran.
The ceasefire led Goldman Sachs to trim its second‑quarter 2026 forecasts for Brent and U.S. crude to $90 and $87 a barrel, respectively, from previous forecasts that Brent and WTI oil prices would average $99 and $91 a barrel, respectively.
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