Oil prices surged back above $100 per barrel on Thursday as markets digested the sobering reality that the fragile U.S.-Iran ceasefire, announced just one day earlier, had yet to translate into resumed tanker traffic through the strategically critical Strait of Hormuz. U.S. West Texas Intermediate crude futures for May delivery climbed more than 6% to $100.27 per barrel by mid-morning, while international benchmark Brent crude futures rose nearly 4% to $98.26 per barrel.
The spike in oil reversed much of Wednesday's historic plunge, when WTI posted its steepest single-day decline since April 2020, falling more than 16% to settle at $94.41 per barrel on news that President Donald Trump had agreed to a two-week ceasefire with Tehran just hours before his deadline to launch a devastating military strike.
The CEO of Abu Dhabi National Oil Company confirmed Thursday that the strait remained closed to tanker traffic, with Iran demanding ships obtain explicit permission from Tehran before transiting the chokepoint. Iran's Islamic Revolutionary Guard Corps cited Israeli strikes on Lebanon as a ceasefire violation, justifying the continued blockade. MarineTraffic data showed large clusters of more than 400 tankers, 34 LPG carriers, and 19 LNG vessels still anchored in the Persian Gulf as of Thursday morning.
The Strait of Hormuz handles approximately 20% of global oil supplies, and its effective closure since the war began in late February has choked off an estimated 12 to 15 million barrels of crude oil per day, triggering the largest disruption of petroleum supplies in recorded history. Energy analysts at BCA Research warned that oil and commodity markets will remain on a structurally elevated floor regardless of the ceasefire outcome, as governments around the world begin hoarding and restocking fuel reserves in anticipation of renewed conflict.
U.S. equity markets reflected the renewed uncertainty. The S&P 500 dipped 0.3% in early trading, while the Nasdaq Composite slipped 0.4% and the Dow Jones Industrial Average shed approximately 139 points. This followed Wednesday's relief rally in which the Dow surged 1,325 points — its best single-day gain since April 2025 — the S&P 500 jumped 2.5%, and the Nasdaq soared 2.8%.
FOMC minutes released this week revealed that Federal Reserve policymakers are increasingly inclined toward rate hikes, citing fears that a prolonged war could embed inflationary pressures into the economy. The OECD has separately forecast that U.S. inflation could rise to 4.2% in 2026, well above the 2.68% average throughout 2025, driven primarily by elevated energy costs. The core personal consumption expenditures price index for February came in at 3%, matching expectations, offering little comfort to investors watching energy prices re-accelerate.
U.S. and Iranian delegations are expected to meet in Islamabad on Friday for direct negotiations aimed at securing a longer-term agreement. Markets will remain on edge, as analysts warn that a lasting resolution requires both a full reopening of the Strait and resolution of deep structural disagreements including Iran's nuclear program and the lifting of sanctions. Until tanker traffic resumes in meaningful volume, the energy shock is far from over, and investors should expect continued volatility across equities, commodities, and fixed income.