Key Takeaways
- Brent and WTI crude futures climbed approximately 3% Thursday following Wednesday’s 13%+ plunge
- Wednesday’s collapse followed President Trump’s announcement of a temporary ceasefire agreement with Iran
- Continued Israeli military operations in Lebanon cast uncertainty over the ceasefire’s reach
- Iran maintains its blockade of tanker movement through the Strait of Hormuz
- Goldman Sachs projects Brent crude could average over $100/barrel if the strait closure extends another 30 days
Crude oil markets staged a notable recovery Thursday following their steepest one-day decline since the April 2020 pandemic crash. 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 selloff was triggered when President Donald Trump revealed a two-week ceasefire arrangement with Iran. Market participants initially interpreted this development as a signal that supply chain interruptions would soon diminish.
However, optimism quickly evaporated. Israeli forces continued conducting military strikes against targets in Lebanon following the ceasefire announcement, creating confusion about the agreement’s actual scope and limitations.
Israeli officials clarified that their military campaigns targeting Hezbollah fall outside the ceasefire framework. Tehran responded by characterizing peace negotiations with Washington as “unreasonable” given existing circumstances, while also accusing Israel of breaching the agreement.
Iran continues to prevent oil tanker movement through the Strait of Hormuz. This critical waterway facilitates roughly 25% of global seaborne petroleum commerce and has remained substantially blocked since the February U.S.-Israeli military strike on Iran.
Goldman Sachs Maps Out Price Trajectories
Goldman Sachs commodity analysts cautioned that an additional month of strait closure could drive Brent crude to average above $100 per barrel during the latter half of 2026.
Their baseline projection assumes shipping activity resumes this weekend, with Persian Gulf export volumes returning to pre-conflict levels within 30 days. This scenario forecasts Brent averaging $82 per barrel in Q3 and $80 in Q4.
An adverse scenario incorporating extended closures and reduced regional production capacity places Brent at $120 during the third quarter and $115 in the fourth quarter.
Goldman’s research team noted that forecast risks lean “skewed to the upside.” Vice President JD Vance has also publicly characterized the ceasefire as precarious.
Trump stated via social media that an understanding was reached “a long time ago” ensuring the Strait of Hormuz would remain operational and secure. He cautioned that military operations against Iran could restart if agreement conditions aren’t fulfilled.
American Crude Inventories Surge to Three-Year Peak
The U.S. Energy Information Administration disclosed that domestic crude reserves increased by 3.1 million barrels to reach 464.7 million barrels during the week concluded April 3. This represents the highest inventory level in almost three years and significantly exceeded market forecasts anticipating a 1 million barrel gain.
Refined product inventories presented contrasting trends. Distillate reserves, encompassing diesel and heating oil, declined by 3.1 million barrels driven by robust export activity. Gasoline stockpiles decreased by 1.6 million barrels.
Iran’s Ports and Maritime Organization designated two approved safe passage corridors for ships transiting the strait, concentrated around Larak Island adjacent to Bandar Abbas.
ING commodity strategists indicated that complete reopening of the strait appears improbable in the immediate timeframe, projecting prices will maintain elevated levels as supply disruptions require considerable time to resolve.
Brent futures had reached a crisis peak of $119.50 before plummeting sharply Wednesday on ceasefire headlines.
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