Brent Tops $102 as Iran Seizes Ships and Hormuz Talks Collapse

Brent crude rose 0.4% to $102.33 a barrel and WTI rose 0.6% to $93.52 Thursday in Asian trade. This continued the gains from last week, which saw Iran attack and seize two ships in the Strait of Hormuz, peace talks in Pakistan fall apart, and President Trump announce an indefinite ceasefire extension with no new deadline, no new talks planned, and no clear way for either side to reopen Hormuz.

The market always says the same thing: the problems are structural, the talks have stopped, and 20% of the world's oil supply is still offline with no date set for a settlement.

How the Week Unfolded — and Why Oil Is Still Climbing

The week was full of the kind of whipsaw swings that have become typical of oil trade since the U.S.-The war between Israel and Iran began in late February. Prices went up and down a lot when there were signs of a truce, then back up when it became clear that Hormuz would stay closed.

The continued progress on Thursday was caused by Iran's seizure of two commercial ships in the Strait on Wednesday. This was a direct increase in Tehran's police presence in the waterway, which keeps the closure in place and the supply disruption in place.

The U.S. naval blockade of Iran is still in place, and this week there were reports that Washington is chasing Iranian ships in Asian waters beyond the Gulf region. This is an increase in the area under pressure that Tehran has used as an excuse to refuse to negotiate further.

Iran's stance is now very clear: there will be no peace talks as long as the U.S. blockade is in place. Trump's attitude is also very clear: there will be no major peace deal until Hormuz is fully opened again. In the short run, those two conditions can't exist at the same time. That's why the ceasefire extension has no end date. Under the current rules, there is no way for either side to change their stated stance.

The $120 Print and Why $160 Isn't Being Priced

After the worst part of the Hormuz shutdown, Brent briefly went above $120 a barrel. This level got a lot of attention from the market and led to rumors about more tensions rising. The Polymarket contract for WTI hitting $160 in April has a 0% chance of happening, which tells us all we need to know about the analysis: markets are pricing in the current disruption as serious but not getting worse than it is now.

At its present level, the ceiling shows a certain danger assessment. More and more oil is being sent through alternative ports in Saudi Arabia and the UAE. These are Yanbu on the Red Sea and Fujairah on the Gulf of Oman.

Together, they are loading about 6.5 million barrels of oil every day. Even though this is only a small part of the 13 million bpd that ING says has been affected by the closure of Hormuz, it shows that the most important Gulf producers have a way to partially bypass the problem, which limits the worst-case supply situation.

The energy security plan that China has in place also lowers demand. Beijing gets some of its energy from sources other than Iran and keeps some in strategic reserves. This means that the breakdown in the Hormuz Strait does not directly cause a crisis in Chinese imports as a simple supply chain model would suggest. 

China already has a problem with reflation, and expensive oil makes it worse by raising input costs without increasing consumption. This puts its own demand destruction ceiling on oil prices.

For the $160 scenario to happen, there would have to be proven problems at Saudi Aramco facilities, a big increase in Iranian military action beyond Hormuz, or a breakdown in the OPEC+ production coordination that has been helping to make up for lost supply. Those things are not happening right now.

The Three Variables That Will Move Oil Next

Making choices about production by OPEC+ is the first lever. The gang has a lot of extra capacity that wasn't used in large amounts during the crisis. Any sign that Saudi Arabia will boost production to make up for the lost volume through the Strait of Hormuz would put the most direct downward pressure on prices right now.

The most volatile factor is still the diplomatic messages between the US and Iran. Every rumor about a ceasefire, every canceled talk, and every episode involving an Iranian ship causes intraday swings of several percent.

There is no deadline for Trump's indefinite ceasefire extension, which gets rid of the near-term binary that was making positions more clear. However, this also gets rid of the forcing function that could have led to a negotiated result. The geopolitical risk premium built into crude is still at the same level because markets are pricing in a long standoff instead of a quick settlement.

Shipping data from the Strait of Hormuz is the physical sign that will lead the diplomatic statement. Any confirmed rise in the number of tankers going through the strait, above the current low number, would be the first real-world sign that either a deal is closer than the news suggests or that Iran is only letting certain countries pass.

$100 to $105 Brent is currently in the middle range—above the pre-crisis levels that would mean the Hormuz problem is over, but below the $115–$120 highs that predicted an impending full-scale escalation. The indefinite extension of the truce keeps the upper limit stable by taking away the chance that U.S. military strikes will start up again right away.

By keeping the physical disruption going, the ongoing loop of blockade and vessel seizure keeps the lower bound stable. Until the blockade is lifted (which would allow talks to happen) or Iran agrees to a framework for reopening Hormuz (which would allow a deal to be made), crude doesn't have many moving parts in either way. 

Trade in the range and watch out for the very small chance that something bad could happen with Aramco or Fujairah's infrastructure, which would make the cap much higher again.