TLDR
- Brent and WTI futures climbed approximately 3% Thursday following Wednesday’s 13%+ collapse
- Wednesday’s selloff followed Trump’s announcement of a temporary ceasefire agreement with Iran
- Continued Israeli military operations in Lebanon are casting uncertainty over the ceasefire’s effectiveness
- Iran maintains its blockade of oil tanker movement through the Strait of Hormuz
- Goldman Sachs projects Brent could exceed $100/barrel if the strait blockade extends another month
Crude oil markets staged a significant recovery Thursday following their steepest single-session decline since April 2020. Brent crude futures advanced 2.8% to settle at $97.68 per barrel, while West Texas Intermediate gained 3.3% to reach $97.50 per barrel.
Wednesday’s dramatic selloff occurred immediately following President Donald Trump’s declaration of a two-week ceasefire agreement with Iran. Market participants initially interpreted the announcement as signaling an imminent resolution to ongoing supply constraints.
However, optimism quickly dissipated. Israeli forces continued launching strikes against targets throughout Lebanon despite the ceasefire announcement, generating confusion regarding the agreement’s actual scope and coverage.
Israeli officials clarified that military operations targeting Hezbollah fall outside the ceasefire framework. Iran responded by characterizing peace negotiations with Washington as “unreasonable” given prevailing circumstances and accused Israel of breaching the agreement.
Iran continues to block oil tanker transit through the Strait of Hormuz. This critical waterway facilitates approximately one-quarter of global seaborne petroleum commerce and has remained substantially closed following the February U.S.-Israeli military operation against Iran.
Goldman Sachs Lays Out the Scenarios
Goldman Sachs analysts cautioned that continued closure of the strait for an additional month could push Brent crude to average above $100 per barrel during the latter half of 2026.
Their baseline projection anticipates that shipping activity will resume this weekend with Persian Gulf exports normalizing to pre-conflict levels within 30 days. This scenario forecasts Brent averaging $82 per barrel in Q3 and $80 in Q4.
An adverse scenario involving extended closure and regional production losses would drive Brent to $120 during the third quarter and $115 in the fourth quarter.
Goldman analysts noted that risks to their price projections are “skewed to the upside.” Vice President JD Vance has also characterized the ceasefire as precarious.
Trump stated via social media that there had been a longstanding understanding that the Strait of Hormuz would remain open and secure. He indicated that military operations against Iran could restart if agreement terms are not honored.
U.S. Crude Stocks Jump to Three-Year High
The U.S. Energy Information Administration disclosed that domestic crude inventories increased by 3.1 million barrels to reach 464.7 million barrels during the week concluded April 3. This represents the highest inventory level in nearly three years and significantly exceeded analyst forecasts of a 1 million barrel build.
Refined product inventories presented a contrasting picture. Distillate reserves, encompassing diesel and heating oil, declined by 3.1 million barrels driven by robust export activity. Gasoline stocks decreased by 1.6 million barrels.
Iran’s Ports and Maritime Organization designated two approved safe passage corridors for vessels transiting the strait, both positioned around Larak Island adjacent to Bandar Abbas.
ING analysts indicated that complete reopening of the strait remains improbable in the immediate term and anticipate prices will maintain elevated levels as supply disruptions require considerable time to resolve.
Brent futures reached a crisis peak of $119.50 before plummeting sharply Wednesday on ceasefire developments.
