Oil prices climbed Thursday as hopes for easing tensions between Iran and the United States faded, sending shockwaves through global energy and financial markets.
Futures for Brent crude, the international benchmark, rose nearly 2% to surpass $104 per barrel after Tehran denied reports of ongoing negotiations with Washington. The increase reversed earlier declines driven by speculation of a possible diplomatic breakthrough.
Iranian Foreign Minister Abbas Araghchi said in remarks aired on state media that Tehran is not engaged in direct discussions with the United States and has “no intention of negotiating for now.”
The comments undercut optimism sparked a day earlier when reports suggested US President Donald Trump had proposed a multi-point plan to end the conflict.
In response, White House Press Secretary Karoline Leavitt warned Iran would face stronger military consequences if it failed to accept defeat, signaling a continued hardline stance from Washington.
At the center of the market’s concerns is the Strait of Hormuz, a critical route that carries roughly one-fifth of the world’s oil supply. Iran’s effective disruption of traffic through the strait, along with attacks on regional energy infrastructure, has sharply reduced shipments.
According to maritime intelligence firm Windward, only four vessels transited the strait on Tuesday, a dramatic drop from the pre-conflict daily average of about 120 ships.
Oil prices have surged more than 40% since late February, when US and Israeli strikes on Iran triggered the current escalation. The supply shock has forced several countries to introduce fuel rationing and energy-saving measures.
Efforts to stabilize the market have included coordinated releases from emergency reserves by members of the International Energy Agency, though analysts say such measures offer only temporary relief.
Financial markets reflected the heightened uncertainty. Asian equities declined, with Japan’s Nikkei 225, South Korea’s KOSPI, and Hong Kong’s Hang Seng Index all opening lower.
Analysts say oil prices are likely to remain volatile until shipping through the Strait of Hormuz resumes at normal levels. While Iran has stated that vessels not aligned with its adversaries may pass, actual traffic remains severely constrained.
