Oil prices advanced on Friday after fresh hostilities between the United States and Iran reignited concerns over the durability of the fragile ceasefire and clouded prospects for reopening the Strait of Hormuz, a vital corridor for global crude oil and liquefied natural gas shipments.
Brent crude futures rose 67 cents, or 0.67%, to $100.73 per barrel by 0650 GMT, while U.S. West Texas Intermediate (WTI) crude futures gained 45 cents, or 0.47%, to $95.26 per barrel. Earlier in the session, both benchmarks had surged more than 3% as traders reacted to the latest escalation.
The rebound followed three consecutive sessions of losses driven by optimism earlier this week that Washington and Tehran were nearing a peace agreement capable of halting the conflict, even though broader disputes over Iran’s nuclear ambitions remained unresolved.
Despite Friday’s recovery, both oil benchmarks are still on track for weekly declines of around 6%.
Market volatility intensifies amid geopolitical uncertainty
“The market is on the cusp of a complete breakdown,” said Vandana Hari, founder of oil market analysis provider Vanda Insights.
“Price formation is no longer anchored in a pragmatic reading of the war’s trajectory or the physical realities in the Strait of Hormuz.”
Crude prices accelerated higher after Iran accused the United States of breaching the ceasefire that had been in place for the past month. U.S. officials responded by saying recent military strikes were retaliation for Iranian attacks on U.S. Navy vessels moving through the Strait of Hormuz on Thursday.
Iranian military officials stated that American forces struck both an Iranian oil tanker and another vessel, as well as civilian locations in the Strait and on Iranian soil.
Even with the renewed military activity, U.S. President Donald Trump later told reporters on Thursday that the ceasefire remained operational.
“The U.S. administration continues to oversell the prospects of a thaw, and an optimism-biased market buys into it,” Vanda Insights’ Hari said.
“Curiously, each time, the rebound is gradual and incomplete, making the head fakes at least somewhat effective.”
Supply concerns remain elevated as negotiations continue
The latest confrontation unfolded while Washington awaited Tehran’s response to a revised peace proposal. Reports indicated that the proposal avoided several contentious subjects, including U.S. demands to reopen the Strait of Hormuz, which before the conflict began on February 28 handled roughly 20% of global oil and LNG trade.
“On the supply front, the picture remains tight,” IG analyst Tony Sycamore said in a note.
Separately, Reuters reported on Thursday that the U.S. Commodity Futures Trading Commission has launched an investigation into approximately $7 billion worth of oil trades executed ahead of major Trump announcements related to the Iran conflict.
According to the report, most of the transactions involved bearish positions placed on the Intercontinental Exchange (ICE) and Chicago Mercantile Exchange (CME). The trades reportedly anticipated falling oil prices before Trump announced delays to military action, ceasefire agreements or other Iran-related policy decisions that later pushed crude markets lower.
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