WTI crude climbs as Hormuz tensions, tight supply and inflation fears collide
Oil prices rebound on supply fears
West Texas Intermediate (WTI) crude traded near $91.90 per barrel in early Asian hours on Thursday, reversing two days of losses as traders priced in sustained supply risks through the Strait of Hormuz and rising geopolitical tension between the United States and Iran.
The key shipping chokepoint remains partly blocked after tanker movements were halted following Israeli strikes in Lebanon, disrupting crude flows and reinforcing a geopolitical risk premium in oil markets.
Iran suspends talks, cites ceasefire violations
Iranian officials said the latest developments violate terms of a recent ceasefire framework, injecting fresh uncertainty into negotiations with Washington.
Parliament speaker Mohammad Bagher Ghalibaf claimed the United States breached three elements of Iran’s 10-point proposal, prompting Tehran to suspend talks aimed at reaching a permanent agreement.
U.S. delegation seeks partial reopening
U.S. Vice President JD Vance said the waterway could begin reopening in the coming days. He led a U.S. delegation to Islamabad for discussions with Iranian representatives over the weekend, focusing on maritime navigation protocols and the security of energy cargoes.
Those talks ended without a firm deal on shipping rules, though both sides agreed to reconvene within ten days in an effort to prevent further escalation in the Gulf.
Strait of Hormuz remains critical chokepoint
Analysts noted that traders are reluctant to discount the geopolitical premium in crude prices as long as the outcome of these talks remains uncertain.
The Strait of Hormuz handles around 20% of global oil and gas exports and is a core export route for Iraq, Saudi Arabia, Kuwait and Qatar. Any sustained disruption there is seen as a direct threat to global supply chains.
Standard Chartered sees at least two weeks of strain
Research from Standard Chartered suggested that shipping volumes are likely to stay constrained for at least two weeks, citing potential disruptions, elevated insurance costs and operational bottlenecks.
Iranian media reported that naval authorities, working with the Revolutionary Guards, have drawn up mapped corridors to reroute vessels around suspected mine zones, adding complexity and cost to regional transport.
U.S. crude stock draw deepens supply concerns
Supply worries were reinforced by the U.S. Energy Information Administration’s latest weekly report, which showed a domestic crude inventory draw of 4.2 million barrels, nearly double the expected decline.
The sharper-than-forecast reduction signals that demand is running ahead of available supply more than previously assumed, supporting prices even as broader financial conditions tighten.
Higher energy costs feed into inflation
The latest surge in energy costs is increasingly visible in macro data. March Consumer Price Index figures, released yesterday, showed annual inflation accelerating to 3.8%, with transportation and fuel making the largest contribution to the upside surprise.
Federal Reserve Governor Adriana Kugler said the central bank cannot overlook renewed inflation pressure stemming from commodity markets, reinforcing expectations that monetary policy may need to remain restrictive for longer.
Flight to safety boosts dollar and yields
In response to growing geopolitical and inflation risks, traders have rotated toward perceived safe-haven assets. The U.S. Dollar Index (DXY) climbed above 106.50 for the first time since last quarter, while the 10-year Treasury yield rose to 4.55%.
Derivatives pricing and volatility gauges indicate traders are bracing for larger price swings across major asset classes through the remainder of the month, as markets position more defensively ahead of the next Federal Open Market Committee meeting.
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