Global oil markets steadied on Thursday after an intraday rally briefly pushed U.S. crude above $100 per barrel, as signs of diplomatic progress in the Middle East tempered fears of an immediate supply shock.
Prices pulled back from session highs after Israel signalled a willingness to enter negotiations with Lebanon, easing one of the key tensions surrounding a fragile U.S.-Iran ceasefire. Still, disruptions in the Strait of Hormuz continue to cast a long shadow over global energy markets.
Brent crude futures hovered near $95 a barrel after climbing as high as $99.50 earlier in the session, while U.S. West Texas Intermediate (WTI) crude settled below its peak of $102.64.
The market’s partial retreat follows a turbulent week in which prices swung sharply on geopolitical developments. Both benchmarks had plunged more than 13 per cent on Wednesday after Donald Trump announced a temporary ceasefire with Iran.
However, the situation on the ground remains complex.
Israeli strikes in Lebanon intensified even after the ceasefire announcement, underscoring differing interpretations of the agreement. Israel maintains that its operations against Hezbollah fall outside the ceasefire’s scope, a position backed by Washington, while Iran has accused Israel of violating the truce and hardened its stance on negotiations.
In a potential diplomatic opening, Benjamin Netanyahu said Israel would begin direct negotiations with Lebanon, focusing on Hezbollah’s disarmament and the prospect of normalising relations.
Despite tentative diplomatic progress, a more immediate concern for traders lies in the Strait of Hormuz, a critical artery for global oil shipments.
Iran’s move to halt tanker traffic through the strait has delayed any meaningful recovery in supply flows, keeping risk premiums elevated. Analysts warn that any prolonged disruption could have far-reaching economic consequences, particularly for Asia, which depends heavily on Middle Eastern energy imports.
According to JPMorgan Chase, the current surge in oil prices remains relatively contained compared with previous geopolitical shocks, despite what it describes as the largest supply disruption in history.
“It is comforting that the rise in global crude oil prices is limited thus far,” said Bruce Kasman, the bank’s chief economist, pointing to existing supply buffers and expectations that the disruption will prove temporary.
The bank forecasts Brent crude to average around $100 per barrel in the second quarter before easing, with prices likely to stabilise closer to $85 per barrel in the second half of 2026, well above pre-crisis expectations of $60.
Fresh data from the Energy Information Administration added another layer of complexity to the outlook.
U.S. crude stockpiles rose by 3.1 million barrels to 464.7 million barrels in the week ending April 3, the highest level in nearly three years, defying expectations of a drawdown.
At the same time, refined fuel inventories declined, with distillates and gasoline both posting notable drops, driven by strong export demand.
