Brent crude oil prices moved higher on Thursday after comments from U.S. Vice President JD Vance raised fresh concerns about the stability of the recently agreed ceasefire framework involving the United States, Iran and their regional allies. The remarks reignited geopolitical worries in the Middle East, prompting traders to reassess supply risks in global energy markets.
Market sentiment had improved earlier in the session as investors anticipated a gradual restoration of oil flows through the Strait of Hormuz. However, renewed concerns surrounding the ceasefire agreement contributed to volatility in crude oil prices.
Brent crude futures settled at US$79.85 per barrel, gaining 30 cents or 0.38% during the session. Meanwhile, U.S. West Texas Intermediate (WTI) crude futures declined by 19 cents, or 0.25%, to close at US$76.60 per barrel.
Prior to the latest comments from U.S. officials, Brent crude had touched its lowest level since 2 March, while WTI crude reached its weakest level since 4 March. Investors had been pricing in a gradual easing of supply concerns following progress in diplomatic negotiations between the United States and Iran.
According to market analysts, even minor disruptions to the fragile ceasefire arrangement could have an immediate impact on oil prices, given the strategic importance of Middle Eastern energy supplies.
The Strait of Hormuz continues to be the most closely watched factor for global oil markets. Before the conflict began, approximately 20% of the world's oil supply passed through the critical shipping route.
Market participants are monitoring whether oil flows through the strait can return to normal levels as outlined under the recent memorandum of understanding between the United States and Iran. The agreement establishes a 60-day negotiation period and includes provisions aimed at restoring full shipping capacity through the strait within 30 days.
Analysts believe that the market has already priced in a significant recovery in oil flows. Any delays or disruptions to that recovery could lead to renewed upward pressure on crude oil prices.
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The 14-point agreement between the United States and Iran extends beyond shipping arrangements and also applies to regional allies, including Lebanon. The framework seeks to reduce tensions while creating conditions for broader economic and political negotiations.
However, several key issues remain unresolved, including Iran's nuclear programme. The agreement also calls for the United States and its partners to develop a US$300 billion recovery package to support Iran's economic reconstruction.
Given the complexity of these negotiations, investors remain cautious about the long-term durability of the ceasefire and its impact on energy markets.
Industry experts expect oil flows through the Strait of Hormuz to recover gradually rather than immediately. While shipping activity is improving, analysts caution that crude oil prices may remain elevated as inventories are replenished and demand continues to recover.
Goldman Sachs expects Gulf oil exports to return to pre-war levels by the end of July, with crude production recovering more fully by October. The investment bank estimates that a meaningful normalisation in exports could be achieved through a 13 million barrel-per-day increase in Hormuz oil flows, bringing traffic back to roughly 70% of pre-war levels.
The outlook suggests that supply conditions may improve steadily over the coming months, although uncertainty remains a significant factor for traders.
Adding another layer of complexity to the oil market, China's oil consumption is forecast to reach 753 million metric tonnes in 2026, representing a 4.9% decline from 2025 levels. The reduction is attributed to the country's accelerating transition towards new energy technologies and the impact of higher oil prices on demand.
Meanwhile, geopolitical risks remain elevated after Ukrainian drones reportedly struck an oil refinery in the Russian capital for the second time this week. The incident highlights ongoing supply risks linked to the Russia-Ukraine conflict and continues to support a risk premium in global energy markets.
Crude oil prices remain sensitive to developments in the Middle East, particularly around the US-Iran ceasefire agreement and the restoration of oil flows through the Strait of Hormuz. While expectations of improving exports have limited further gains, geopolitical uncertainty, supply risks and ongoing global conflicts continue to provide support for crude oil prices. Investors are likely to remain focused on diplomatic developments and energy supply trends in the weeks ahead.
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Published on: Jun 19, 2026, 10:09 AM IST
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