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Oil markets react to escalating tensions in Middle East
Global oil prices climbed sharply Thursday as investors grew skeptical about the durability of a recent US-Iran ceasefire following Israeli airstrikes on Lebanon. Tehran issued a stern warning, threatening a "regret-inducing response" if attacks persist, while US officials insisted forces would remain in the region until Iran fully adheres to the truce terms.
Ceasefire agreement unravels
Just one day after a tentative deal sent crude prices tumbling, reports emerged that Iran had declared the critical Strait of Hormuz closed to shipping, contradicting earlier assurances. The waterway, a vital chokepoint for global oil shipments, had been slated to reopen under the ceasefire agreement.
Brent crude, the international benchmark, rose 2% to $96.53 per barrel, while US-traded West Texas Intermediate jumped 2.8% to $97.02. Vice President JD Vance described the truce as "fragile," adding to market unease.
Stock markets retreat amid uncertainty
Equity markets reversed course after Wednesday's gains, reflecting growing concerns over energy supply disruptions. Japan's Nikkei 225 index fell 0.5%, and South Korea's Kospi declined 1.8%.
"There's a little bit of nervousness in global markets. They're giving back some gains, and that reflects uncertainty over whether the Strait of Hormuz is actually open,"
Victoria Scholar, Head of Investment at Interactive Investor, speaking to the BBC
Shipping industry faces logistical chaos
Iran's navy issued a stark warning to vessels attempting to traverse the Strait of Hormuz without authorization, threatening to "target and destroy" them. Shipping brokerage firm SSY confirmed the alert to BBC Verify, noting that only a fraction of the usual 130 daily transits have occurred since the ceasefire was announced.
Maritime tracking firm Pole Star Global estimated it would take at least 10 days to clear the backlog of waiting ships, even if normal traffic resumes immediately. Some nations, including Malaysia, India, and the Philippines, have negotiated safe passage for their vessels, but the situation remains volatile.
"It's very difficult to plan because every day brings different news. One moment, we hear the strait will open, and by evening, the situation changes,"
Nils Haupt, Hapag-Lloyd spokesperson, speaking to the BBC
Haupt added that the industry is awaiting clarity on potential transit fees, warning that excessive charges could disrupt global shipping routes.
Ceasefire terms under dispute
The truce's scope remains contentious, particularly regarding Lebanon. Israel launched its most intense bombardment of the country in this conflict on Wednesday, killing at least 182 people. Hezbollah retaliated with rocket attacks on northern Israel, citing ceasefire violations.
Vice President Vance is scheduled to meet Iranian officials in Pakistan on Saturday to discuss the agreement's implementation. Meanwhile, the fate of the Strait of Hormuz-and global energy markets-hangs in the balance.
