Key Highlights
- Brent and WTI futures jumped approximately 3% Thursday following a massive 13%+ plunge the previous day
- Wednesday’s selloff followed Trump’s announcement of a temporary ceasefire agreement with Iran
- Continued Israeli military operations in Lebanon cast uncertainty over the ceasefire’s actual parameters
- Iran continues blocking oil tanker passage through the critical Strait of Hormuz
- Goldman Sachs projects Brent averaging over $100/barrel if the strait remains shut for an additional month
Crude oil markets staged a significant recovery Thursday following their steepest single-session decline in more than four years. Brent crude futures advanced 2.8% to reach $97.68 per barrel, while West Texas Intermediate gained 3.3% to settle at $97.50 per barrel.
Wednesday’s dramatic plunge followed President Donald Trump’s declaration of a two-week ceasefire arrangement with Tehran. Market participants initially interpreted this development as signaling an imminent resolution to supply constraints.
However, the optimism proved short-lived. Israeli military forces persisted with strikes against Lebanese targets following the ceasefire announcement, creating confusion about the actual scope and terms of the agreement.
Tel Aviv maintains that its military campaign against Hezbollah falls outside the ceasefire framework. Meanwhile, Tehran has rejected current peace negotiations with Washington as “unreasonable,” while accusing Israel of breaching the truce terms.
Tehran has maintained its blockade on oil tanker movement through the Strait of Hormuz. This critical waterway accounts for roughly 25% of global seaborne petroleum commerce and has remained effectively shuttered since February’s joint U.S.-Israeli military strike on Iran.
Goldman Sachs Outlines Price Projections
Goldman Sachs strategists cautioned that an additional month of strait closure would push Brent crude to average above $100 per barrel during the latter half of 2026.
Their primary forecast anticipates shipping activity resuming this weekend, with Persian Gulf export volumes returning to pre-conflict levels within 30 days. This scenario projects Brent averaging $82 per barrel in Q3 and $80 in Q4.
A pessimistic alternative scenario, incorporating extended closure duration and reduced regional output, forecasts Brent reaching $120 in the third quarter and $115 in the fourth quarter.
Goldman analysts emphasized that risks to their pricing models are “skewed to the upside.” Vice President JD Vance has also characterized the ceasefire as tenuous.
Trump stated via social media that there was longstanding agreement regarding the Strait of Hormuz remaining open and secure for navigation. He cautioned that U.S. military operations against Iran could restart if agreement terms are violated.
U.S. Petroleum Inventories Reach Three-Year Peak
The Energy Information Administration disclosed that domestic crude reserves increased by 3.1 million barrels to 464.7 million barrels during the week concluded April 3. This represents the highest inventory level in nearly three years and substantially exceeded analyst projections of a 1 million barrel build.
Refined product inventories presented a contrasting picture. Distillate reserves, encompassing diesel fuel and heating oil, declined by 3.1 million barrels amid robust export activity. Gasoline stocks decreased by 1.6 million barrels.
Iran’s Ports and Maritime Organization designated two authorized safe passage corridors for vessels transiting the strait, both positioned around Larak Island adjacent to Bandar Abbas.
ING strategists indicated that complete reopening of the strait appears improbable in the immediate future, suggesting prices will maintain elevated levels as supply disruptions require considerable time to resolve.
Brent futures had peaked at $119.50 during the crisis’s most intense period before plummeting Wednesday on ceasefire announcements.
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