The move in oil prices higher slowed a plunge that began immediately after Trump announced the ceasefire Tuesday night. U.S. crude oil dropped more than 16% Wednesday.
“Prices rebounded as fighting in the Middle East continued, and the ceasefire outlook deteriorated, keeping uncertainty around the Strait of Hormuz firmly in focus,” ING commodities analysts wrote in a Thursday morning note. “Optimism over the ceasefire faded after Tehran said several terms of the agreement had been breached.”
On Wednesday, Iranian media reported that the Strait of Hormuz, a key component of the ceasefire, had been closed again after Israel struck Lebanon. Mohammad Bagher Ghalibaf, the speaker of the Iranian Parliament, also said that the U.S. violated the deal.
“Ceasefire violations carry explicit costs and STRONG responses,” he wrote on X.
Iran insists that a halt to Israeli strikes in Lebanon be included in any ceasefire deal. The U.S. and Israel, however, say it is a separate conflict.
Likewise, the U.S. demands that the Strait of Hormuz be fully opened to marine traffic, while Iran says it intends to police transit and exact tolls from passing ships under any ceasefire deal.
On Thursday morning, the CEO of the Abu Dhabi National Oil Co. also took aim at the ceasefire in a post on LinkedIn.
“This moment requires clarity,” Sultan Al Jaber wrote. “So let’s be clear: the Strait of Hormuz is not open. Access is being restricted, conditioned and controlled.”
“Markets remain at a critical crossroads,” Al Jaber added. “The final cargoes that transited the Strait of Hormuz before the conflict are now arriving at their destinations.”
Stocks initially fell on Thursday, but news from Israeli prime minister Benjamin Netanyahu that his country is seeking “to open direct negotiations with Lebanon as soon as possible” jolted stocks higher at midday.
The S&P 500 rallied 0.7%, the Dow jumped more than 385 points and the Nasdaq popped 0.8%.
Since the ceasefire was announced Tuesday evening, ship traffic in the Strait of Hormuz has not increased. On Wednesday, just four ships passed, the lowest level since March 31, according to S&P Global Market Intelligence data.
As of Thursday morning, U.S. crude oil prices were still up more than 70% since the start of the war.
Experts say that without a substantial drop further, gas prices will likely remain elevated for consumers.
“This roller coaster may not be over yet,” GasBuddy analyst Patrick De Haan said on X. Still, the initial drop in oil prices on the ceasefire news could translate into “some downside to gas prices for many this weekend,” he added.