Oil Rebounds After Historic Drop as Middle East Tensions Cloud Ceasefire Outlook

Oil prices moved higher on Thursday, recovering part of their sharp losses from the previous session, as ongoing disruptions in the Strait of Hormuz and renewed geopolitical tensions kept supply concerns in focus.

Brent crude rose 2.4% to $97.02 per barrel, while U.S. West Texas Intermediate (WTI) climbed 3.1% to $97.37 per barrel in early trading.

The rebound followed a dramatic selloff on Wednesday, when both benchmarks plunged more than 13% after the announcement of a temporary two-week ceasefire between the United States and Iran.

However, optimism around the ceasefire quickly faded as Israeli strikes on Lebanon intensified, raising doubts about the durability and scope of the agreement. Israel indicated that its military operations against Hezbollah were not included in the ceasefire terms, while Iran criticized the continued attacks and questioned the feasibility of ongoing negotiations.

At the same time, Iran halted oil tanker traffic through the Strait of Hormuz, delaying any meaningful recovery in global supply flows and reinforcing uncertainty in energy markets.

Additional pressure came from U.S. inventory data. The Energy Information Administration reported that crude stockpiles rose by 3.1 million barrels to 464.7 million barrels in the week ending April 3, reaching their highest level in nearly three years and defying expectations for a drawdown.

In contrast, refined product inventories declined, with distillates dropping by 3.1 million barrels on strong export demand, while gasoline stocks fell by 1.6 million barrels.

Despite the ceasefire announcement, the combination of geopolitical instability and ongoing supply disruptions continues to dominate market sentiment, keeping oil prices volatile.