OIL MARKET STABILIZES WITH 1% GAIN AS ISRAEL ANNOUNCES PEACE TALKS WITH LEBANON

Oil Prices Settle Below $100 as Middle East Ceasefire Holds

New York, - Oil prices closed up 1% but settled below $100 for the second straight session on Thursday in volatile trading. The fragile Middle East ceasefire held, and Israel said it would start direct negotiations with Lebanon as soon as possible.

The session began with doubts over the durability of the two-week ceasefire between the United States and Iran, stoking concerns about ongoing restrictions to energy flows through the Strait of Hormuz. This led to prices rising more than 5%. However, the gains were later pared after Israeli Prime Minister Benjamin Netanyahu announced that he had instructed officials to open peace talks with Lebanon, including discussions on disarming Hezbollah.

Brent crude futures settled up $1.17 or 1.2%, at $95.92 a barrel, after hitting a session high of $99.50. U.S. West Texas Intermediate crude closed up $3.46 or 3.7% at $97.87 a barrel, well below its intraday peak of $102.70.

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Both benchmarks fell below $100 per barrel in the previous trading session, with WTI recording its biggest decline since April 2020, on optimism that the ceasefire would result in a reopening of the Strait.

However, questions have lingered over the ceasefire's effectiveness as ship traffic through the Strait of Hormuz fell to well below 10% of normal volumes on Thursday after Iran asserted control by warning vessels to remain within its territorial waters. Prices for some physical oil grades hit fresh all-time highs.

The Hormuz waterway connects supply from Gulf producers such as Iraq, Saudi Arabia, Kuwait, and Qatar to global markets, and typically carries 20% of global oil and gas supply. Concerns over supply disruptions in Saudi Arabia resurfaced after state news agency SPA said late on Thursday that attacks had reduced the kingdom's oil production capacity by about 600,000 barrels per day and cut throughput on its East-West Pipeline by roughly 700,000 bpd.

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The report lifted Brent and WTI more than $1 a barrel in post-settlement trading as markets digested the news. Even if shipments resume, the risks won't disappear overnight, according to Susannah Streeter, chief investment strategist at Wealth Club. Tankers may be forced to navigate mined waters and a heightened military presence, all of which will keep insurance premiums high and freight costs elevated.

Regional oil facilities remain under threat, with Iran striking sites in nearby countries after the ceasefire, including a pipeline in Saudi Arabia that has been used to bypass the blockaded waterway, according to an oil industry source. Crude loadings at Saudi Arabia's Red Sea port of Yanbu have continued despite an Iranian attack on Wednesday on the East-West Pipeline.

Goldman Sachs trimmed its second-quarter 2026 forecasts for Brent and U.S. crude to $90 and $87 a barrel, respectively, from previous forecasts that Brent and WTI oil prices would average $99 and $91 a barrel, respectively.