Oil Jumps as U.S.-Iran Hormuz Exchange Cracks Ceasefire Confidence

CNBC reported Friday that oil prices surged after the United States and Iran exchanged fire in the Strait of Hormuz, reigniting fears that a fragile ceasefire between the two countries is falling apart.

Oil Prices Spike on Hormuz Alarm

International benchmark Brent crude for July delivery climbed more than 2% to $102.32 per barrel Friday morning. U.S. West Texas Intermediate for June delivery rose a similar amount to $96.76 per barrel. Both contracts had been volatile throughout the week as Middle East tensions escalated.

Both Washington and Tehran blamed the other for initiating the Strait of Hormuz incident. The exchange came just as Iran was reportedly reviewing a U.S. proposal to formally end hostilities. President Donald Trump dismissed the severity of the clash in a call with an ABC News reporter Thursday night. He described the strikes as “just a love tap” and insisted the ceasefire remained intact.

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Background: A Waterway the World Cannot Afford to Lose

The Strait of Hormuz is one of the most strategically vital shipping corridors on the planet. Roughly 20% of global oil supply transits the narrow waterway between Iran and Oman. Any sustained disruption there sends immediate shockwaves through energy markets worldwide. Tensions over the strait have periodically threatened oil supply chains for decades. The current ceasefire had already been strained by repeated, competing claims of violations before Friday’s exchange.

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Trump Pauses Naval Escort Mission After Market Jitters

Trump had launched “Operation Freedom,” a U.S. naval mission to escort commercial vessels through the strait. He later paused the operation following the clash. Analysts at ANZ wrote in a note that market optimism around a possible Hormuz reopening was already fading before the shooting started. Reports that Washington was preparing to resume naval escort operations had introduced fresh uncertainty. ANZ described oil prices as experiencing a “rollercoaster rise” amid doubts over peace negotiations.

Citi analysts offered a somewhat more measured outlook. The bank said broader financial markets should eventually stabilize despite the Middle East turbulence. Citi cautioned, however, that the road to normalization remains bumpy and that oil prices could stay elevated for months.

ANZ analysts noted that any breakdown in a proposed U.S. peace deal would likely sustain volatility in crude markets well into the summer.

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