Oil Rebound Toward $97 as US-Iran Tensions Stall
Global oil prices rebounded toward US$97 per barrel on Thursday as renewed geopolitical tensions in the Middle East reignited fears of possible disruptions to crude shipments through the Strait of Hormuz, one of the world’s most strategically important oil transit routes.
The recovery in prices follows fresh reports of US military strikes linked to Iran, alongside stalled diplomatic efforts between Washington and Tehran aimed at de-escalating tensions and restoring broader regional stability. The breakdown in progress has reintroduced uncertainty into global energy markets, which had earlier shown signs of easing.
Investor sentiment had briefly improved earlier in the week amid optimism that both sides could move closer to an agreement that might reduce tensions in the Gulf region and ensure the continued free flow of oil through the Strait of Hormuz. However, that optimism faded after reports indicated that negotiations were struggling over key issues, including Iran’s demands relating to its nuclear programme and strategic influence over the waterway.
US President Donald Trump further hardened Washington’s stance, reiterating that the United States would not accept what he described as a “bad deal.” He also resisted calls for immediate sanctions relief, despite mounting pressure from Tehran, which has urged economic concessions and an end to military pressure as part of any settlement.
The renewed diplomatic deadlock has once again placed the Strait of Hormuz at the centre of global energy market concerns. The narrow shipping passage is responsible for transporting roughly one-fifth of global oil supplies, making it one of the most critical chokepoints in international trade. Any disruption to traffic through the waterway has historically triggered sharp price volatility in global crude markets.
Although oil prices have rebounded, they remain on track for a second consecutive weekly decline as traders continue to balance hopes of a diplomatic resolution against the risk of sustained regional instability. The mixed outlook has contributed to heightened volatility, with market participants reacting quickly to every development in the US-Iran standoff.
Analysts warn that a successful diplomatic breakthrough could see prices retreat into the high US$80s or low US$90s per barrel as supply concerns ease and shipping routes stabilise. However, they also caution that any prolonged disruption to tanker movements through the Strait of Hormuz could push Brent crude back above the US$100 mark, tightening global supply conditions.
The latest fluctuations in oil prices are also raising broader macroeconomic concerns, particularly for oil-importing economies. Rising energy costs could feed into higher transport fares, production expenses and inflationary pressures, potentially complicating monetary policy decisions in both advanced and emerging markets.
For now, markets remain highly sensitive to geopolitical developments, with oil prices expected to continue reacting sharply to any signs of escalation or progress in US-Iran relations.
