Crude oil markets experienced a sharp intraday reversal on Thursday, with West Texas Intermediate (WTI) futures initially dropping below $90 per barrel before recovering to above $93, and Brent crude sliding toward $95 before rebounding to reclaim the $100 mark [1]. The early decline in oil prices was driven by optimism in equity markets following reports that Iran was close to responding to the latest US ceasefire proposal, which was delivered via Pakistani mediators and structured as a one-page memorandum. This proposal aimed to declare an end to the war and initiate a 30-day negotiation window on issues such as nuclear enrichment, frozen Iranian assets, and security in the Strait of Hormuz [1].
President Donald Trump described the ongoing negotiations as "very good talks" but also warned of potential strikes "at a much higher level and intensity" if Iran failed to respond positively [1]. Tehran, however, has conditioned further progress on the lifting of the US naval blockade, while the Islamic Revolutionary Guard Corps (IRGC) continues to enforce new procedures for passage through the Strait of Hormuz [1]. Despite the hope for a deal, the physical oil market has not seen any easing of structural pressures. Maersk confirmed that one of its US-flagged vessels transited the Strait under US Navy escort, but the broader Project Freedom escort operation has been paused at the request of Pakistan and Saudi Arabia [1].
The US blockade on Iranian-bound shipping remains in effect, and the IRGC is still publicly acknowledging captains for complying with Iranian regulations in the Strait [1]. US gasoline prices are near $4.54 per gallon, the highest since July 2022, and previous disruptions such as QatarEnergy's force majeure on LNG shipments and regional infrastructure damage have not been resolved [1]. The market's reversal reflects a shift in sentiment rather than any substantive change in the underlying situation, as no formal agreement has been signed and the core drivers of supply risk persist [1].
CONCLUSION
Crude oil prices rebounded sharply as hopes for a ceasefire deal faded and the physical realities of the Strait of Hormuz blockade persisted. Despite diplomatic efforts, no agreement has been reached, and key supply risks remain unresolved, keeping market sentiment cautious and volatility elevated.