Oil prices surged on Thursday, with Brent crude climbing over 3% to near $99 per barrel and West Texas Intermediate (WTI) jumping 6.6% to surpass $100, as a fragile US-Iran ceasefire showed signs of unraveling and the critical Strait of Hormuz remained largely closed. The price reversal followed a steep sell-off on Wednesday after the initial ceasefire announcement.
The geopolitical flashpoint centers on the Strait of Hormuz, a chokepoint for roughly 20% of global oil supply. Traffic through the strait has plummeted to near-zero levels, with only four ships crossing on Wednesday—far below the normal daily average. More than 400 vessels are currently stranded in the region. Iran has informed mediators it will cap daily crossings at around a dozen ships and institute a toll system, reportedly charging fees of around $1 per barrel, effectively transforming the waterway into a controlled toll road.
Goldman Sachs analysts, including Daan Struyven, outlined multiple price scenarios in a client note. Their base case assumes oil flows begin recovering this weekend, with a gradual, month-long return to pre-war export levels. This would see Brent crude average $82 per barrel in Q3 2026 and $80 in Q4.
However, the bank's "adverse view" scenario—featuring a one-month delay in reopening—projects Brent averaging over $100 per barrel in the second half of the year. A more severe "prolonged shutdown" scenario, incorporating reduced regional output, projects prices hitting $120 per barrel in Q3 and $115 in Q4. "We continue to see the risks to our price forecast as skewed to the upside," the analysts stated.
The ceasefire's fragility was highlighted by Iranian parliamentary speaker Mohammad Bagher Ghalibaf, who claimed the US-Iran framework had been "openly and clearly violated," citing continued Israeli strikes on Lebanon and US drone incursions. Israel conducted one of its largest assaults on Lebanon since the conflict began, striking over 100 targets. The White House maintains its deal with Iran does not cover Lebanon, where Iran backs Hezbollah.
US Vice President JD Vance warned that if the strait does not begin to reopen, the US would not abide by its terms, a sentiment echoed by President Donald Trump, who stated US forces would remain in the region "until such time as the real agreement is fully complied with." US and Iranian negotiators are scheduled to meet in Islamabad, Pakistan, on Saturday.
Other institutions like UBS also maintain a Q4 Brent forecast of $80 but acknowledge significant upside risks, questioning whether Gulf producers like Saudi Arabia and the UAE would send tankers through an Iranian-controlled strait. The two countries currently have a combined 4 million barrels per day of production shut in.
Analysts at Rystad Energy noted that futures markets would experience the most immediate reaction to any escalation, as they price in fear, optionality, and probability. With a full reopening unlikely soon, oil prices are expected to remain elevated, supporting broader inflationary pressures.
