Oil Prices Rebound Sharply as Strait of Hormuz Blockade Fuels Supply Fears

By Bloomberg News

Global oil markets staged a volatile rebound on Thursday, with prices climbing sharply after a historic sell-off, as the prolonged blockage of the Strait of Hormuz and escalating cross-border strikes threatened to unravel a tentative peace in the Middle East.

Brent crude futures rose above $97 a barrel, a significant recovery after Wednesday's 13% collapse. West Texas Intermediate (WTI) traded near $98. The rally was triggered by conflicting reports over the status of the world's most important oil transit corridor. Iran's Fars news agency claimed all tanker traffic through the strait was halted following Israeli military actions. However, U.S. Vice President JD Vance offered a more optimistic assessment, stating, "We are observing indications that the straits are beginning to reopen."

The near-total closure of the waterway—which handled roughly 20% of global seaborne crude and liquefied natural gas before the initial U.S.-Israeli strikes on Iran in late February—has precipitated the most severe supply disruption in oil market history. In a bid to de-escalate, Vice President Vance is scheduled to lead a U.S. delegation to Islamabad for direct talks with Iranian officials this weekend.

Analysts warn the crisis is far from resolved. "The market is on a hair trigger," said Dennis Kissler, senior vice president for trading at BOK Financial Securities. "A sustained return to lower price levels, say WTI in the low $80s, requires a fully and verifiably open strait with no residual threats. That scenario seems unlikely within the next fortnight."

Sporadic violence continued to flare across the region, including Israeli operations in Lebanon and Iranian retaliatory strikes on Gulf states. A core diplomatic rift persists: Tehran and the U.S.-Israeli alliance disagree on whether the current ceasefire terms extend to the Lebanon-Israel front.

Adding to the tensions, Iranian Parliament Speaker Mohammad-Bagher Ghalibaf declared via social media that three clauses of the ceasefire agreement had already been violated. Meanwhile, in a move underscoring ongoing peril, Iran's Ports and Maritime Organization, cited by state-run Nour News, established two designated safe routes for vessels to navigate the Strait of Hormuz to avoid suspected anti-ship mines.

Energy analysts caution that even if transit resumes, the ripple effects will linger. "The supply chain has sustained significant damage," noted Carl Larry, an oil and gas analyst at Enverus. "Production from fields was dialed back, and refineries curtailed operations or shut down. Bringing everything back online won't be instantaneous; some facilities face weeks, if not longer, of downtime." He added, "Until we see concrete, sustained progress, $90 oil appears to be a firm price floor."

Market Voices: Analysts and Traders Weigh In

We spoke to several industry observers for their take on the day's dramatic price swing and the geopolitical standoff.

Sarah Chen, Energy Strategist at Global Macro Advisors: "This is a classic 'risk premium' return. The market had prematurely priced in a swift resolution. The physical reality of blocked tankers and the high-stakes diplomatic poker game have forced a brutal reassessment. Volatility will remain the dominant theme."

Marcus Johnson, Portfolio Manager at Helios Capital: "The structural tightness in the oil market hasn't disappeared. Global inventories were already lean. This disruption, regardless of duration, burns through that buffer and leaves the market exceptionally vulnerable to any further shock. The price rebound was inevitable."

David Frey, Independent Commodity Trader: "It's an absolute circus. One minute we're told it's opening, the next it's a warzone littered with mines. The conflicting statements from governments are as disruptive as the missiles. This isn't just about oil; it's a complete erosion of trust in any official channel to provide clear information. Consumers worldwide will pay the price for this incompetence and posturing." [More emotional/pointed critique]

Priya Sharma, Senior Fellow at the Institute for Energy Security: "The establishment of 'safe routes' by Iran is a telling development. It implicitly acknowledges the high level of threat while attempting to restore some flow. This could be a first, tentative step towards a managed resumption of traffic, but it's a far cry from the unconditional freedom of navigation the global economy depends on."

--Reporting by Charles Gorrivan. Additional commentary synthesized from market sources.

For more analysis and updates, visit bloomberg.com.

©2026 Bloomberg L.P.