Global Oil Prices Surge Amid Doubts Over US-Iran Ceasefire

Washington D.C. | Crude oil prices rose again on Thursday as doubts emerged over the implementation of the two-week ceasefire between the US and Iran. The price hike is driven by investor concerns that supply from key oil-producing regions in West Asia may not fully resume, coupled with ongoing restrictions in the strategically vital Strait of Hormuz.

On Thursday morning, Brent crude prices rose by $2.6 to $97.35 per barrel, while US West Texas Intermediate (WTI) increased by $3.02 to $97.43. In the previous trading session, both benchmark prices had fallen below $100 following news of the ceasefire. 

WTI, in particular, had seen its largest drop since April 2020, as the market expected the Strait of Hormuz to reopen with the ceasefire. This waterway, which accounts for nearly 20 percent of the world's total oil supply, connects oil from Gulf nations like Iraq, Saudi Arabia, Kuwait, and Qatar to the global market.

However, Israel's intense attack on Lebanon on Wednesday has raised questions about the longevity of this ceasefire. Following the Israeli strike, Iran has signaled it may withdraw from permanent peace talks with the US, calling them 'pointless'. 

As a result, oil shipping companies are reluctant to resume transit through the Strait of Hormuz immediately. They are seeking further clarity on the terms of the ceasefire before resuming shipments.

According to Iranian media, maps and safe routes for ships have been designated to avoid mines in coordination with the Revolutionary Guards. However, analysts state that the Strait of Hormuz is still not risk-free and its control remains at Iran's discretion. 

According to Standard Chartered analysts, the possibility of additional energy supply through this route in the next two weeks is low due to security fears, high insurance premiums, and technical obstacles.

Meanwhile, the threat to regional oil infrastructure has not yet subsided. Reports have emerged that even after the ceasefire was announced, Iran struck oil infrastructure in neighboring countries. Iran has attacked a critical Saudi Arabian pipeline that was used to bypass the Strait of Hormuz. 

In addition, Kuwait, Bahrain, and the United Arab Emirates (UAE) have reported missile and drone attacks. The escalating tension between Israel and Hezbollah and the continuous attacks on energy centers have created significant skepticism about whether this ceasefire will hold.