Oil Prices Rise as Iran, U.S. Send Mixed Peace Signals

Oil held near $96 a barrel as markets priced in the chance that diplomacy could still fail and keep the Strait of Hormuz under pressure. West Texas Intermediate rose less than 1 percent after falling 7 percent on Wednesday, while Brent climbed to $102.05 a barrel and WTI traded at $95.84 in early Thursday trading. The price action reflected uncertainty more than optimism, with traders unwilling to shed the risk premium while the region’s biggest oil chokepoint remained vulnerable.

The uncertainty has centered on mixed signals from Washington and Tehran. Iran sent an updated proposal for negotiations through Pakistani intermediaries on May 1, while U.S. officials later suggested a framework agreement could be near and Donald Trump said the war could end quickly. That gap between public confidence and market risk has kept crude supported, even without a clear diplomatic breakthrough. Shipping has remained the immediate pressure point, with the United States beginning to guide stranded vessels through the strait under Navy escort.

The Strait of Hormuz remains the market’s choke point. At its narrowest, the waterway is only 29 nautical miles wide, with two navigable channels about 2 miles wide in each direction. It normally carries about one-fifth of the world’s oil supply, or roughly 20 million barrels a day, and about one-fifth of global liquefied natural gas trade, much of it from Qatar. The U.S. Energy Information Administration says flows through the strait accounted for more than one-quarter of global seaborne oil trade and about one-fifth of global oil and petroleum product consumption in 2024 and the first quarter of 2025. UNCTAD has described the strait as a vital artery of energy-related trade, and the International Energy Agency has called a blockade the largest disruption in history to oil supply.

For U.S. consumers, the impact would run first through gasoline and diesel, then into the cost of shipping, airline fuel, plastics and chemicals. Higher crude prices tend to push inflation higher with a lag, especially if freight costs rise and supply chains absorb more expensive bunker fuel and jet fuel. Refiners and some domestic producers can benefit from wider margins, but airlines, trucking companies, petrochemical makers and import-heavy retailers are among the sectors most exposed if the standoff drags on. For now, oil is being held up by one simple calculation: until the diplomacy becomes clearer, the market is paying to hedge against the next shock.