Oil prices rebounded on Thursday following a sharp drop in the previous session, as flows through the Strait of Hormuz remained largely restricted and concerns persist about the US-Iran ceasefire holding.
Brent, the benchmark for two-thirds of the world’s oil, was trading 2.10 per cent higher at $96.71 a barrel at 7.22am UAE time on Thursday. West Texas Intermediate, the gauge for US oil, was up 2.66 per cent at $96.92 a barrel.
Both the benchmarks slumped below the $100 per barrel mark on Wednesday after the US and Iran announced a two-week ceasefire. Brent ended the session 13.29 per cent lower at $94.75 a barrel, while WTI was down 16.41 per cent at $94.41 a barrel.
A key part of the ceasefire deal was the resumption of shipping through the Strait of Hormuz, the narrow waterway through which about 20 per cent of the world's oil and gas supply flows.
However, passage through the strait has been restricted so far, with shipping companies also awaiting more details.
The 11 million barrels per day of upstream production currently shut-in across the Middle East can only be restored when export logistics normalise, Wood Mackenzie said on Wednesday.
"A 'workable system' of transit and shipowner confidence in the security of the transiting vessels is essential," said Alan Gelder, senior vice president of Refining, Chemicals and Oil Markets at Wood Mackenzie.
"This includes availability of insurance for transiting vessels, facilitating commercial trade financing, sustained outbound vessel transits through the Strait of Hormuz making current oil on water available to the global refining market, and sustained inbound vessel transits through the Strait making ballasting vessels available to load crude at Gulf load ports."
Meanwhile, Israel's continued attacks on Lebanon have also rattled the market on the whether the ceasefire will continue to hold.
Lebanon's Civil Defence said Israel's strikes across Lebanon on Wednesday killed 254 people. Health officials say 837 more have been wounded.
A ceasefire in Lebanon is a "central condition" of a deal, Iranian President Masoud Pezeshkian said in a call with Pakistani Prime Minister Shehbaz Sharif, who is negotiating the deal.
The 10-point Iranian proposal sent to the US is a "framework for stopping the war, one of the central conditions of which is establishing a ceasefire in Lebanon", Mr Pezeshkian said.
Crude prices have swung wildly in the past few weeks, gaining almost 60 per cent in March due to the disruption caused by the war.
