Audio By Carbonatix
Oil prices rose on Thursday amid investors' concerns that supply from the key Middle East producing region may not fully resume amid doubts that the two-week ceasefire between the U.S. and Iran will hold, and as the crucial Strait of Hormuz remains restricted.
Brent crude futures were up $2.6, or 2.74%, at $97.35 a barrel at 0048 GMT, while U.S. West Texas Intermediate (WTI) crude rose $3.02, or 3.2%, to $97.43 a barrel.
Both benchmark prices fell below $100 per barrel in the previous trading session, with WTI recording its biggest decline since April 2020 on expectations that the ceasefire ending the fighting between the U.S. and Israel against Iran would reopen the Strait of Hormuz.
The waterway connects supply from Gulf producers such as Iraq, Saudi Arabia, Kuwait, and Qatar to global markets and typically carries about 20% of oil supply.
Still, questions about the viability of the ceasefire remain as Israel continued to attack Lebanon on Wednesday, causing Iran to suggest it would be "unreasonable" to proceed with talks to forge a permanent peace deal.
Shippers on Wednesday also said they needed more clarity on the terms of the ceasefire before resuming transit through the Strait of Hormuz. Iran has issued maps to guide ships around mines in the waterway and designated safe paths for passage in coordination with the country's Revolutionary Guards, Iranian media reported.
"Transit through the Strait of Hormuz is not suddenly risk-free. It remains at Iran's discretion," analysts at Standard Chartered said in a note.
"Logistic disconnects, security fears, elevated insurance premiums and operational constraints mean that very little additional energy is likely to be supplied via the Strait of Hormuz in the next two weeks."
Regional oil facilities also 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 Strait of Hormuz, according to an oil industry source.
Kuwait, Bahrain and the UAE also reported missile and drone strikes.
There are doubts the ceasefire can hold, Haitong Futures said in a note, as Israel's strikes on Lebanon's Hezbollah have emerged as a point of contention, while attacks on energy facilities across the Middle East have yet to stop, and conflicting statements persist over the Strait of Hormuz.
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