NEW YORK/LONDON: Global oil prices surged more than 4% on Thursday after Iran signalled it would not reopen the strategically vital Strait of Hormuz while a United States naval blockade remains in place, despite a temporary ceasefire.
US benchmark West Texas Intermediate (WTI) crude climbed over 4% to around $96 per barrel, while Brent crude rose above $105, reflecting heightened concerns over supply disruptions. The Strait of Hormuz, a critical maritime route, typically handles nearly a fifth of global oil and liquefied natural gas shipments, making its closure a major shock to energy markets.
Prices have been climbing steadily since the escalation of conflict following US and Israeli strikes on Iran in late February, with uncertainty over a potential resumption of hostilities continuing to drive volatility.
Despite tensions in the energy market, Wall Street rallied after President Donald Trump extended the ceasefire to allow more time for Pakistan-mediated negotiations. Major US stock indexes posted gains, with the S&P 500 and Nasdaq Composite reaching record closing highs, led by strong performance in technology shares.
Analysts said investors remain cautiously optimistic that the Strait of Hormuz will eventually reopen, limiting long-term economic damage. However, geopolitical uncertainty continues to weigh on global markets, with many companies flagging rising energy costs as a key concern.
Meanwhile, European and emerging markets showed mixed performance, with shares in Europe declining for a third consecutive session amid ongoing regional tensions. Currency markets reflected caution, as the US dollar edged higher against major peers.
In commodities, gold also gained, while cryptocurrencies saw an uptick, with Bitcoin and Ethereum posting moderate increases. US Treasury yields rose slightly, indicating steady but cautious investor sentiment.
While equity markets have largely recovered from earlier shocks linked to the conflict, analysts warn that prolonged high oil prices and continued instability in the Middle East could pose risks to global economic growth.