Just as markets began pricing in relief from a temporary US-Iran ceasefire, crude oil has surged back toward the $100 mark, underscoring how fragile sentiment remains in the face of ongoing geopolitical risks.
After tumbling nearly 15% on Wednesday amid optimism over a two-week truce, prices rebounded sharply within 24 hours as doubts resurfaced over the durability of the agreement and the safety of key energy routes.
On April 9, Brent crude futures rose $3.69, or 3.9%, to $98.44 a barrel, while US West Texas Intermediate (WTI) crude gained $3.47, or 3.7%, to $97.88. Despite the earlier sell-off, traders are unwilling to fully price out geopolitical risks, given the uncertainty surrounding oil flows.
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Why Are Markets Nervous?
Investor anxiety has been reignited by fresh signals from Donald Trump, who said US military assets, including ships, aircraft and personnel, will remain stationed in and around Iran until a final agreement is fully honoured.
“If the terms are not upheld, military action would resume on a much larger scale,” Trump warned in a post, even as he added that such a scenario remains unlikely. He reiterated that Iran must not possess nuclear weapons and that the Strait of Hormuz should remain open and secure.
Compounding concerns, regional tensions have not fully subsided. Israel continued strikes in Lebanon even after the ceasefire announcement, while Iran signalled reluctance to advance peace talks under current conditions, calling it “unreasonable” to proceed.
Shipping activity through the Strait of Hormuz, a chokepoint that handles nearly 20% of global oil and gas flows, also remains constrained. Companies are seeking clarity on ceasefire terms before resuming operations, while Iranian authorities have reportedly issued navigation maps to help vessels avoid mines and follow designated safe corridors.
Risks to energy infrastructure persist as well. Iran has reportedly struck strategic assets in neighbouring countries, including a pipeline in Saudi Arabia used as an alternative export route bypassing Hormuz, according to industry sources.
$100 — And Beyond?
Analysts say the market is still embedding a geopolitical risk premium, with limited visibility on when normal supply flows will resume.
International brokerage Macquarie noted that even if tensions ease, crude is likely to find support in the $85–$90 range, with a gradual climb toward $110 until full normalcy returns. It added that prolonged disruptions through April could push Brent as high as $150 per barrel.
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Ajit Mishra, senior vice president at Religare Broking, echoed a cautious outlook. “The ceasefire is limited to two weeks, and a return to pre-war levels of $70–$75 may take months,” he said. In the near term, he expects crude to trade between $80–$85 on the downside and $95–$100 on the upside.
The Bigger Picture
Market participants increasingly believe oil may be entering a structurally higher price phase. Continued instability in the Middle East, particularly around the Strait of Hormuz, is likely to keep supply chains tight, sustaining upward pressure on prices and fuelling global inflation concerns.
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