Oil pared sharp gains as unverified US ceasefire plan clashes with historic Hormuz blockade

Oil markets swung violently on Tuesday, with benchmarks surging nearly 5% in early trading on structural supply constraints, only to see gains evaporate in post-settlement activity amid reports of a US-brokered peace initiative targeting Iran.

Brent crude closed up $4.55, or 4.55%, at $104.49 a barrel, and WTI added $4.22, or 4.79%, to $92.35. Yet algorithmic and speculative flows quickly reversed course following leaks of a 15-point US framework for Iran and a proposed one-month ceasefire. By late trading, Brent was down to $100.07, up just 13 cents, while WTI eased to $88.41, a marginal $0.29 gain.

Diplomatic signals, including a five-day delay in US strikes on Iranian power infrastructure, temporarily eased headline-driven risk. However, physical market fundamentals remain intensely bullish. The Strait of Hormuz continues to restrict roughly 20% of global oil and LNG flows, with conditional Iranian transit offers failing to restore reliable shipping.

Traders are now contending with a stark disconnect: headline optimism versus ongoing kinetic threats. Recent Iranian missile launches targeting Israel and attacks on gas facilities in Isfahan and Khorramshahr underscore the persistent risk to infrastructure. Analysts, warn that if the chokepoint remains closed through April, Brent could breach its 2008 record and approach $150 a barrel, forcing a dramatic reassessment of global supply forecasts.

Written by: Aiman Haikal