Oil Tops $100 as Strait of Hormuz Traffic Stays Depressed
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- Oil prices climbed back above $100 after initial post-ceasefire optimism about a quick normalization of Strait of Hormuz supply flows faded, with shipping activity still well below normal levels
- The Strait of Hormuz, which carries roughly a fifth of global oil and gas supply, remains the focal point of market anxiety as tanker operators hesitate over security concerns and a lack of clarity on safe passage
- Insurance costs for tankers remain elevated, freight routes are uncertain, and energy companies have yet to fully restore operations despite the absence of fresh large-scale disruptions
- Analysts attribute the price action to a shift from immediate de-escalation optimism to a more cautious stance, as threats to regional infrastructure and continued military activity in parts of the Middle East keep supply risks elevated
- Israeli PM Benjamin Netanyahu said on Thursday he has given an instruction for Israel to begin peace talks with Lebanon that would also include the disarming of Hezbollah
- Geopolitical risk premiums are unlikely to unwind quickly, with traders wary of headline risks around shipping routes and infrastructure attacks even as the ceasefire has reduced near-term full-scale escalation probability
Why it matters: Roughly a fifth of global oil and gas transits the Strait of Hormuz, and with tanker traffic still suppressed and insurance costs elevated, the bottleneck keeps crude above $100 despite no new major disruption — meaning importers and downstream buyers absorb higher costs while the market trades on uncertainty rather than any resolution of underlying tensions.
