TOKYO/SINGAPORE — Oil prices jumped Thursday as traders unwound the prior session’s ceasefire optimism and returned to a supply-risk view of the Middle East, lifting Brent crude about 2% to $104.30 a barrel and U.S. West Texas Intermediate crude about 2.1% to $92.25. The rebound came as investors reassessed ceasefire prospects and the threat to energy flows, pushing the market back toward blocked shipments, shrinking export capacity and the risk that Strait of Hormuz disruption outlasts diplomatic headlines, March 26, 2026.
The swing in crude reflected how tentative diplomacy still looks. On Wednesday, Iran said it was reviewing a U.S. proposal to end the war but was not entering talks to wind down the conflict, a mixed signal that briefly cooled prices before investors returned to the view that the geopolitical premium cannot fade until shipping normalizes.
Why oil prices are rising again
The physical bottleneck remains the bigger story. The U.S. Energy Information Administration says the Strait of Hormuz remains one of the world’s most important oil chokepoints, with flows in 2024 and early 2025 equal to more than one-quarter of global seaborne oil trade and about one-fifth of world oil and petroleum product consumption. Saudi Arabia and the United Arab Emirates can divert only a limited share of those barrels around the strait, which helps explain why even partial disruption keeps a steep risk premium in crude.
The scale of the current shock has also grown beyond a routine geopolitical scare. In its March 2026 oil market report, the International Energy Agency said crude and refined-product flows through Hormuz had fallen from roughly 20 million barrels a day before the war to a trickle, describing the conflict as the largest supply disruption in the history of the oil market. That helps explain why every bounce in diplomacy is being judged against a harder question: when will tankers move normally again?
Real barrels are already being lost, not just repriced. Reuters reported that Iraq’s southern oil output had fallen about 80% as storage tanks filled and exports through Hormuz stayed blocked, turning what began as a headline-driven rally into a measurable supply problem.
Oil prices have been conditioned by years of chokepoint shocks
This week’s move did not emerge in a vacuum. In 2019, oil rose after tanker attacks near Iran, an early reminder of how quickly security threats around Gulf shipping can move crude. In April 2024, traders again braced for gains after Iran’s direct attack on Israel. By June 2024, Red Sea attacks were already forcing more crude and fuel cargoes around Africa, showing how maritime risk can reset freight costs and benchmark pricing well before governments announce formal supply measures.
For now, oil prices are likely to remain highly headline-sensitive, but the physical market still looks tighter than the diplomatic track looks credible. A ceasefire that restores ordinary passage through Hormuz could peel away part of the latest risk premium. Until ships move freely and lost output starts to return, the market appears more inclined to price disruption than peace.
