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Global crude futures rebounded sharply on Thursday as hopes for a rapid diplomatic resolution in the Middle East faded.

Brent rose $5.79, or 5.7%, to $108.01 a barrel, extending its cumulative war premium to around 50%, while US WTI gained $4.16, or 4.6%, to settle at $94.48. Front-month Brent volumes fell to levels last seen in late February, highlighting a market vulnerable to sharp price swings amid thin liquidity.

The rally followed Tehran’s rejection of a 15-point US peace framework, which called for strict limits on uranium enrichment and ballistic missile development and was widely seen as biased toward Washington. This dismissal amplified risk premiums and underscored the fragility of the region’s geopolitical outlook.

Supply-side disruptions further reinforced the price surge as the Pentagon deployed thousands of troops to the Gulf, Houthi forces renewed threats along the Red Sea, and Iraqi storage tanks reached critical capacity, forcing sharp output reductions from the country, OPEC’s second-largest producer.

Russian exports were also constrained as Ukrainian drone strikes temporarily halted processing at the Kirishinefteorgsintez facility, adding to an estimated 40% of Russia’s oil export capacity already offline. Together, these disruptions intensified global supply concerns and underpinned the steep market repricing.

Limited concessions provided only marginal relief. Iran allowed selective tanker transits for Thai, Malaysian, and Spanish vessels, yet these exemptions remain insufficient to address the estimated 20 million-barrel daily shortfall. France has initiated multilateral discussions with 35 nations to coordinate a post-conflict reopening of the Strait of Hormuz, signaling continued international efforts to stabilise oil flows.

Written by: Aiman Haikal