Oil Rallies Near $96 as Hezbollah Rejects Ceasefire, Choking Hormuz Flows

Key Takeaways

• Oil prices advanced in Asian trading on Friday after Hezbollah's rejection of a Washington-brokered ceasefire dimmed prospects for a broader Middle East peace deal.

• Both global benchmarks are on track for significant weekly gains of 3% to 6% as a wave of U.S.-Iran proxy airstrikes exacerbates structural supply anxieties.

• Crude flows through the critical Strait of Hormuz remain heavily restricted, locking a persistent geopolitical risk premium into near-term futures contracts.

Crude Oil Price Today ▼

Sell Buy

Oil prices rallied in Asian trade on Friday after Hezbollah rejected a U.S.-brokered ceasefire in Lebanon, dashing diplomatic hopes and stoking fresh supply anxieties across global energy markets.

Brent crude futures for August delivery rose 0.8% to $95.75 a barrel on the Intercontinental Exchange by 23:05 ET (03:05 GMT). Concurrently, West Texas Intermediate (WTI) crude futures edged up 0.5% to trade at $90.47 a barrel. The prompt-month benchmarks are tracking weekly gains between 3% and 6%, largely driven by an intense escalation in military hostilities that has drawn direct cross-border airstrikes between U.S. and Iranian forces.

The geopolitical landscape deteriorated late Thursday when the Iran-backed Hezbollah militia formally dismissed a proposed truce with Israel. The group explicitly refused to withdraw its forces from southern Lebanon, while denouncing concurrent bilateral negotiations. In response, Israeli defense officials signaled that operations in southern Lebanon would persist without withdrawal, effectively terminating a brief pause in hostilities observed earlier in the week. Consequently, energy traders quickly re-priced the risk of a protracted conflict.

This diplomatic breakdown severely undermines broader expectations for a comprehensive Washington-Tehran peace pact. Crucially, Iranian officials have repeatedly stated that a verifiable Lebanese ceasefire is a structural prerequisite for any lasting regional accord. The breakdown follows reports that Tehran has halted indirect backchannel negotiations with the U.S. after accusing Washington of violating an existing ceasefire framework. Tensions escalated further this week as the U.S. struck asset targets inside Iran, triggering retaliatory strikes by the Islamic Revolutionary Guard Corps against American infrastructure in Kuwait and Beirut.

Furthermore, this military volatility continues to choke physical crude logistics through the Strait of Hormuz, the world’s most critical maritime energy chokepoint. While recent U.S. naval interventions successfully incentivized a marginal increase in commercial ship transits, aggregate oil flows remain severely depressed relative to pre-war baselines. Given that approximately 20% of global petroleum consumption historically transits this channel, the ongoing logistical gridlock points to an extended period of constrained global inventories. Therefore, in the absence of a clear path toward de-escalation, crude prices are expected to remain firmly underpinned by a structural supply deficit.