Oil rebounds as fragile Gulf ceasefire, constrained Hormuz keep supply risks elevated

Oil prices, including Brent and WTI crude, rose significantly on Thursday as market participants expressed doubts over the stability of a fragile two-week Middle East ceasefire, which had initially caused prices to dip below $100. Analysts are hesitant to fully unwind geopolitical risk pricing, citing continued Israeli attacks on Lebanon and Iran's subsequent suggestion to halt peace talks, raising questions about the ceasefire's viability. The crucial Strait of Hormuz, through which 20% of global oil and gas supply typically passes, remains constrained by security fears, logistical challenges, and elevated insurance premiums, despite Iran issuing guidance for safe passage. This means limited additional energy is expected via the Strait, keeping supply risks elevated. Further exacerbating concerns, regional oil facilities, including a Saudi pipeline used to bypass Hormuz, have reportedly been struck by Iran post-ceasefire, with Kuwait, Bahrain, and the UAE also reporting missile and drone attacks.