Crude Climbs as US-Iran Tensions Hit Hormuz Ceasefire

Key Moments

Oil Futures Rebound After Three-Day Slide

Oil benchmarks advanced on Friday, reversing part of this week’s losses as renewed hostilities between the United States and Iran reignited geopolitical risk in a crucial energy corridor.

As of 0356 GMT in New Delhi, Brent crude futures were higher by $1.20, or 1.2%, at $101.26 per barrel. U.S. West Texas Intermediate (WTI) futures gained 85 cents, or 0.9%, to $95.66 per barrel. Both contracts had been more than 3% higher at the market open.

The move came after three consecutive sessions of declines driven by reports that Washington and Tehran were nearing a peace agreement that would halt the fighting while deferring unresolved issues over Iran’s nuclear activities. Despite Friday’s rebound, both benchmarks were still on track to drop about 6% over the week.

Market Sentiment and Geopolitical Risk

Recent price action has reflected what some analysts describe as a disconnect between trading and underlying fundamentals tied to the conflict and physical flows through the Strait of Hormuz.

“The market is on the cusp of a complete breakdown. Price formation is no longer anchored in a pragmatic reading of the war’s trajectory or the physical realities in the Strait of Hormuz,” said Vandana Hari, founder of oil market analysis provider Vanda Insights.

Friday’s rally followed fresh accusations from Tehran that the United States had breached the month-long ceasefire between the two sides. U.S. officials said their latest strikes were in response to Iranian fire aimed at U.S. Navy vessels moving through the Strait of Hormuz on Thursday.

According to Iran’s military, U.S. forces struck an Iranian oil tanker, another vessel, and civilian locations both within the strait and on Iranian territory. Despite the escalation, U.S. President Donald Trump later told reporters on Thursday that the ceasefire remained in place.

“The U.S. administration continues to oversell the prospects of a thaw, and an optimism-biased market buys into it. Curiously, each time, the rebound is gradual and incomplete, making the head fakes at least somewhat effective,” Vanda Insights’ Hari said.

Strait of Hormuz and Supply Outlook

The latest exchange of fire occurred as Washington awaited Tehran’s reaction to a new peace proposal. That plan did not resolve several key points of contention, including the U.S. push to reopen the Strait of Hormuz, which had carried one-fifth of global oil and liquefied natural gas volumes before the conflict began on February 28.

“On the supply front, the picture remains tight,” IG analyst Tony Sycamore said in a note.

Regulatory Scrutiny of Oil Trading Activity

In a separate development, the U.S. Commodity Futures Trading Commission has opened an investigation into oil trades totaling $7 billion that were executed ahead of major Iran war-related announcements by President Trump, according to a Reuters report on Thursday.

The bulk of the positions under review involved short bets – wagers on falling prices – on the Intercontinental Exchange (ICE) and the Chicago Mercantile Exchange (CME). These trades were placed before Trump statements on attack postponements, the ceasefire, or other adjustments to Iran policy that were followed by declines in oil prices.