Oil prices extended gains on Thursday, with Brent crude rising above $104 per barrel as escalating tensions around the Strait of Hormuz and conflicting diplomatic signals between the United States and Iran continued to roil global energy markets.
The latest advance reflects deepening uncertainty over efforts to de-escalate the conflict. Iranian authorities have ruled out negotiations with Washington and rejected a proposed ceasefire, instead insisting on their own terms, including sovereign control over the vital shipping corridor.
In contrast, the White House has maintained that diplomatic efforts remain active, with President Donald Trump indicating that channels for negotiation are still open. Reports suggest a multi-point proposal has been conveyed to Tehran through intermediaries, aimed at restoring stability and reopening the waterway.
The near-closure of the Strait of Hormuz, through which a significant share of the world’s oil supply flows, has triggered one of the most severe supply disruptions in recent years. Millions of barrels per day have effectively been removed from global markets, tightening supply and pushing prices higher.
Although some oil shipments continue under Iranian protection, the broader disruption has strained global supply chains, with several import-dependent economies now facing acute shortages. Countries such as South Korea, Australia, and Philippines are increasingly grappling with fuel constraints as shipping routes remain unstable.
The rally in crude underscores a fundamental shift in market dynamics. Oil is no longer responding primarily to demand signals but to geopolitical risk and physical supply constraints. Traders are reacting in real time to developments in the conflict, amplifying volatility and driving sharp price swings.
Analysts warn that prices could climb further if disruptions persist or escalate, particularly if the Strait remains constrained. At the same time, any credible diplomatic breakthrough could trigger a rapid reversal, as the restoration of flows would ease supply pressures.
For now, the oil market remains firmly anchored to geopolitical developments, with the balance between diplomacy and disruption determining the direction of prices.
