Oil prices rallied in early Asian trade on Thursday after reports said the United States conducted another strike on Iran this week, reversing some of the earlier losses that followed suggestions the Strait of Hormuz could reopen to commercial shipping within 30 days.
By 20:05 ET (00:05 GMT), July Brent futures had jumped 1.9% to $96.03 a barrel, while July West Texas Intermediate (WTI) futures increased 1.9% to $90.36 a barrel. The gains came after news of explosions in southern Iran and reports of U.S. military action.
Three explosions were heard in Bandar Abbas in the early hours of Thursday. Reuters reported that the U.S. military had carried out new strikes on an Iranian military site. The strikes were described by officials as actions taken in "self defence," and the U.S. military said a ceasefire with Iran remained in place.
The reports of Thursday's attacks arrived shortly after U.S. President Donald Trump dismissed media accounts that Iran would reopen commercial shipping through the Strait of Hormuz within a month. He also rejected suggestions that Iran and Oman would jointly control the strait, and indicated he was not yet satisfied with a proposed peace deal with Iran.
Crude had fallen sharply on Wednesday and was carrying deep losses for the week amid market bets that a U.S.-Iran peace agreement was imminent. Those expectations had pushed Brent below the $100-per-barrel mark earlier in the week as traders priced in the potential reopening of the Strait of Hormuz to commercial traffic.
While U.S. officials had offered some cautious optimism on negotiations with Iran over the past week, the two sides remained in disagreement over Tehran's nuclear activities and the status of the Strait of Hormuz. Reports over the past week showed a steady trickle of vessels passing through Hormuz, but those flows remained a fraction of pre-war levels. The continued disruption of the strait has been affecting roughly a fifth of global oil supplies, according to the reporting in this article.
Market context and immediate drivers
Thursday's uptick in oil reflected an immediate reaction to renewed military activity and political comments that tempered earlier market hopes for a quick reopening of a critical shipping lane. The earlier slide in prices this week was tied to speculation that the Strait of Hormuz could be re-opened within about 30 days, a scenario that would ease transportation bottlenecks and reduce a premium that had been built into crude markets.
Analysts and traders were parsing statements from Washington for clarity on negotiations and on the intentions behind the reported strikes. The U.S. characterization of the strikes as "self defence" and the assertion that a ceasefire remained in effect are part of official framing that market participants will weigh alongside on-the-ground reports of explosions in Bandar Abbas.
What remains uncertain
- The timing and extent of any real reopening of the Strait of Hormuz remain unclear, despite prior reporting that it could happen within a month.
- Negotiations between the U.S. and Iran continue to show signs of progress in some comments from officials, but both sides are still at odds on key issues such as Tehran's nuclear activities and control of maritime routes.
- Commercial shipping flows through Hormuz have increased only to a limited degree in recent days and are still well below pre-conflict levels, sustaining significant disruption to global oil supplies.
Implications for markets and sectors
Energy markets, shipping and broader commodity trading are the immediate sectors affected by the developments described in this article. Prices are reacting to the changing risk premium around supply routes, while traders assess whether diplomatic progress will reduce that premium or whether renewed hostilities will push it higher again.
Given the continued uncertainty over the Strait of Hormuz and the state of U.S.-Iran negotiations, market volatility is likely to persist until more sustained and verifiable progress on maritime access and diplomatic settlement is reported.