Oil prices rise as traders eye fragile US-Iran ceasefire

On Thursday morning in Asian markets, global oil prices increased as investors closely monitor the stability of the recent US-Iran ceasefire. The agreement, which is conditional, has faced scrutiny after Israel intensified its strikes on Lebanon, prompting Iran to threaten a strong retaliation if the attacks persist.

Wednesday’s oil market saw a sharp drop following the announcement of an agreement that included the Strait of Hormuz’s reopening. However, the waterway’s traffic has remained disrupted due to Iran’s warning to vessels crossing it without authorization. The country had previously threatened to target ships in retaliation for US-Israeli airstrikes on Iranian infrastructure.

Global benchmark Brent crude climbed 3.3% to $97.90, while West Texas Intermediate, traded in the US, rose 3.2% to $97.55. Prices are still significantly higher than pre-war levels, which were set on 28 February. The ceasefire was finalized on Tuesday evening Washington time, just minutes before a deadline imposed by US President Donald Trump.

Trump had warned of dire consequences if no deal emerged, stating, “a whole civilisation will die tonight.” A key clause of the agreement allows ships to safely transit the Strait of Hormuz. However, Iran’s navy issued a warning that vessels crossing the strait without permission would be “targeted and destroyed,” as confirmed by shipping broker SSY.

“Vessels seeking to cross the Strait of Hormuz without permission will be targeted and destroyed,” stated SSY in a verified report.

Since the ceasefire took effect, only a few ships have navigated the strait, far below the average of 130 daily transits before the conflict. Disputes also linger over Lebanon’s inclusion in the agreement. On Wednesday, Israel conducted its most intense bombing campaign against the country, resulting in at least 182 casualties. Hezbollah responded by launching rockets at northern Israel, citing ceasefire breaches.

US Vice President JD Vance is set to engage in talks with Iran in Pakistan on Saturday, aiming to solidify the fragile arrangement. The situation remains tense, with ongoing concerns about the agreement’s effectiveness and regional tensions.