International oil prices have gone up as concerns grow over whether a fragile US-Iran ceasefire will hold after Israel launched a wave of strikes on Lebanon.
The attacks led Tehran to warn of a “regret‑inducing response” if the strikes continue, while Donald Trump has said US forces will remain in the region until Iran complies with the “real” ceasefire agreement.
Oil prices had plunged on Wednesday after an agreement to pause the conflict was announced, which included the reopening of the key Strait of Hormuz waterway.
But reports that Iran has said the crucial shipping route will remain closed because of the Israeli strikes has renewed fears of a lengthy disruption to energy supplies from the region.
Global benchmark Brent crude rose 2% to $96.53 a barrel, while US-traded West Texas Intermediate was 2.8% higher at $97.02.
“I think there’s a little bit of nervousness in global markets,” Victoria Scholar, head of investment at Interactive Investor, told the BBC’s Today programme.
“Markets are giving back some gains… and I think that reflects a lot of uncertainty over whether the Strait of Hormuz is actually open.”
Oil prices remain far higher than they were before the war started on 28 February.
The cost of crude had risen due to suggestions that talks between Iran and the US were “still fragile”, said OCBC bank strategist Sim Moh Siong.
The flow of energy shipments through the Strait of Hormuz will be the market’s key focus in the days ahead, he added.
There is also uncertainty over how Tehran plans to oversee the movement of ships, Sim said.
Traders are watching for any changes to the supply of oil, while the relationship between Iran and the US is “obviously fragile”, Danny Price from consultancy Frontier Economics.
Given that some damaged oil and gas facilities will take time to fix, it is likely that prices will remain higher for at least a year, he added.
