Oil Swings on Hezbollah Ceasefire Rejection and Iran Talks Stall

Brent crude fell about 3% to $95.03 a barrel on hopes of a ceasefire, but it rose to about $95.75 in Asian trade on Friday. This session summed up the most important features of the oil market since the conflict began: relief rallies that end when diplomatic progress is shown to be hollow, and underlying price support that won't break because the physical supply disruption is still there. In the same way, WTI went down to $93.04 and then back up to $90.47.

Both standards are on track for weekly gains of 3–6%. This is because of the ongoing Hormuz disruption, not because of price changes in a single session.

Why Prices Fell — Then Recovered

The first 3% drop happened after two events that made people really hopeful about de-escalation. Israel and Lebanon agreed to stop fighting on Wednesday night. Trump was said to want a diplomatic solution to the Iran conflict, and a White House source confirmed that he is still not ready for a full-scale war.

Markets saw those signs as a possible way for Hormuz to reopen and lower the risk of supply disruptions in the Gulf. The global risk premium that has kept oil prices high for months seemed to be falling.

Within 24 hours, both signs turned out to be incomplete, which led to the recovery. Hezbollah officially rejected the terms of the ceasefire announced by the U.S. State Department and said it would not withdraw its troops from Lebanon.

This directly undermined the framework that Tehran had set as a condition for any lasting peace deal with the U.S. At the same time, Iran's foreign minister said that talks had stopped because of the new violence, which goes against Trump's description of the talks as being in their "final stage."

The pattern now looks like a whipsaw: diplomatic claims lead to relief rallies, but operational facts turn them around.

The Underlying Supply Picture Has Not Changed

The fundamental situation of the oil market has not changed, even when session-level diplomatic noise is taken into account. The Strait of Hormuz is still blocked. Before the war, about one-fifth of the world's oil intake went through it.

Some more ships are crossing because of U.S. naval action, but oil flows are still "well below pre-war levels," according to a market study. The trend shows that the world supply will not get better right away.

This week there was also a direct exchange of military strikes. The US hit several targets in Iran, which led to attacks in Kuwait and Beirut by the Revolutionary Guards in response. At the same time that official claims of "ongoing talks" were made, operations were stepped up. This shows the difference between what Washington says is progress and what can be seen on the ground.

It's a good way to describe the situation that "there has been little evidence of diplomatic progress with Iran, despite claims to the contrary from Washington since at least late March."

Hezbollah's refusal has a big effect on the price of oil because Tehran has made it clear that any peace deal with Iran will depend on a halt in Lebanon.

As long as Hezbollah is fighting in Lebanon and refusing to follow the rules of the ceasefire, Iran can't really promise to return to normalcy, which is what opening Hormuz again needs. The talks between Iran and Lebanon are not going in sync; they are happening one after the other, and Lebanon is currently getting in the way of the flow.

What Would Move Oil in Either Direction

The bull case is simple: Hezbollah agrees to new ceasefire terms, fighting stops in Lebanon, Iran starts direct talks with the U.S. again, and a plan for reopening Hormuz is agreed upon, even if it is only for a short time. In that case, the actual supply relief from ships sitting off the Gulf could cause prices to drop quickly. The short-term goal is $85–$90 Brent before the time it takes to rebuild logistics makes the supply gap bigger.

The worst thing that could happen to oil prices (the upside) is new U.S. or Israeli attacks that lead to wider Iranian response, Hezbollah attacks that spread to Gulf infrastructure targets, or a breakdown in the ceasefire agreement that the U.S. and Iran have been supposed to keep in place.

The Adnoc CEO's opinion is still the physical anchor: even if fighting stopped right away, it would take at least four months to get Hormuz volumes back to where they were before the war, and it would take until 2027 to get them back to normal.

$90 to $96 Brent is currently in the middle range—above the levels that would mean the Hormuz problem is over but below the $115–$120 highs that priced in an impending all-out war.

Hezbollah's refusal to stop fighting and Iran's failure to move forward with talks ended the most hopeful diplomatic scenario in the near future. This brought back the supply disruption premium that had been partly deflated by the news of the ceasefire on Wednesday.

The weekly gain of 3% to 6% correctly shows the structural reality: the conflict is neither getting worse toward disaster nor getting better toward normalcy. Both it and the supply problem are moving forward.