Oil markets moved higher on Thursday after fresh military exchanges between the United States and Iran weakened expectations for a near-term peace agreement and renewed fears of prolonged disruption in the Strait of Hormuz.
By 05:51 ET (09:51 GMT), Brent crude futures had gained 2.3% to $96.42 per barrel, while U.S. West Texas Intermediate crude futures rose 2.2% to $90.52 per barrel.
Gulf Tensions Escalate Following New Attacks
Iran’s Islamic Revolutionary Guard Corps announced that it had launched strikes against a U.S. airbase in Kuwait in response to earlier American attacks targeting the Iranian port city of Bandar Abbas.
Meanwhile, Kuwaiti authorities confirmed that the country was responding to incoming missile and drone attacks, although officials did not identify the origin of the strikes.
The latest military action marked a renewed escalation between Washington and Tehran despite repeated U.S. assertions that a fragile ceasefire remained in place. Earlier this week, the United States described its strikes against Iran as defensive operations.
Trump Comments Weigh on Peace Deal Expectations
Thursday’s escalation followed comments from U.S. President Donald Trump, who rejected reports suggesting Iran could reopen commercial shipping routes through the Strait of Hormuz within a month.
Trump later indicated that he remained unconvinced by the current proposals aimed at ending the three-month conflict between the two countries.
Oil prices had declined on Wednesday and had also suffered sharp weekly losses amid growing expectations that a diplomatic breakthrough between the U.S. and Iran was close. However, Trump’s latest remarks suggested markets may have become overly optimistic regarding the pace of negotiations.
Although U.S. officials had delivered some positive signals about ongoing discussions with Tehran in recent days, major disagreements remained over Iran’s nuclear programme and future control of the Strait of Hormuz.
Strait of Hormuz Disruptions Continue to Pressure Markets
Recent reports showed that some shipping traffic had resumed through the Strait of Hormuz, although overall volumes remained far below pre-conflict levels.
The continued disruption around the waterway is still affecting roughly one-fifth of global oil supplies, keeping traders focused on the risk of tighter energy markets.
Trump also rejected suggestions that Iran and Oman could jointly oversee the strait, arguing that no single country should control such a strategically important shipping route.
Analysts Warn of Growing Risks to Global Energy Infrastructure
Analysts at Yardeni Research warned that both Iran and the broader global oil market were approaching increasingly fragile conditions.
“If an agreement is reached, it may be because the oil market is approaching a dangerous stage for both Iran and the global oil industry. Iran faces a lack of oil storage that could force it to shut down oil production, and the global oil industry is running on such slim supplies that it could start affecting pipelines and other oil infrastructure,” analysts at Yardeni Research said in a note to clients.