Oil prices held on to recent gains after US President Donald Trump extended a ceasefire with Iran, even as the continuation of a naval blockade in the Strait of Hormuz kept supply concerns front and centre. Brent crude for June settlement slipped 0.2% to $98.32 a barrel, while WTI for June delivery eased 0.3% to $89.36, after both benchmarks surged nearly 9% over the previous two sessions.
While the truce signalled a temporary pause in direct conflict, the US decision to maintain restrictions on Iran-linked shipping has limited any downside in prices. Trump said Washington would refrain from further strikes but continue blocking vessels until negotiations conclude. The move underscores a key market dynamic: even without active escalation, constrained flows through Hormuz are enough to keep oil elevated.
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Hormuz Disruption Fuels Volatility
The Strait of Hormuz — which typically handles about a fifth of global crude flows — remains effectively choked. Shipping disruptions have intensified, with multiple vessels intercepted or forced to turn back. Volatility in oil markets has surged to levels last seen during the pandemic in 2020, highlighting how sensitive prices remain to developments in the Gulf.
Iran has warned it will not reopen the waterway as long as US naval interceptions continue, and has signalled it could escalate if needed. Reports suggest dozens of vessels have already been impacted by enforcement actions.
Diplomatic efforts appear increasingly fragile. Planned talks in Islamabad — once seen as a last-minute opportunity to de-escalate — now look uncertain, with both sides sending conflicting signals. Markets briefly spiked above $100 a barrel in after-hours trading on reports that US Vice President JD Vance cancelled a planned visit, only to retreat after confirmation of the truce extension.
The US has indicated it will continue applying economic pressure on Iran, targeting its oil exports and revenue channels. This includes efforts to restrict shipments and limit storage capacity at key export hubs.
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