Oil prices remained elevated on Thursday despite a slight decline, as escalating military confrontations between U.S. and Iranian forces around the Persian Gulf disrupted the recovery of maritime traffic through the Strait of Hormuz. The vital waterway, through which a significant portion of the region’s energy exports pass, saw a marked reduction in vessel movements amid renewed hostilities.
Data from maritime analytics firm Kpler showed that only 25 ships transited the strait on Wednesday in both directions, down from 49 the previous day. This figure remains low compared to pre-conflict levels, which exceeded 130 ships daily. The drop raises concerns over the viability of the nascent recovery in shipping activity following a cease-fire agreement reached last month between the United States and Iran. However, the situation remains fluid as fighting continued for a second day, with both sides exchanging strikes.
President Donald Trump characterized recent U.S. military actions, which targeted approximately 90 sites along Iran’s coastline, as “retribution” for attacks by Iran on commercial vessels in the strait. Meanwhile, Mohammad Bagher Ghalibaf, Iran’s chief peace negotiator, stated that the Strait of Hormuz “will open only under Iranian arrangements, not American threats.” The International Maritime Organization, a United Nations agency, has advised shipowners and operators to avoid passing through the strait amid the instability.
Many ships currently navigating the passage have opted for the Iranian-designated corridor along the coast, which Iran deems the only safe route. This route is preferred because the central portion of the strait is considered hazardous due to the threat of mines reportedly laid by Iranian forces. Only a single vessel used the alternative Omani route on Wednesday, where the U.S. Navy is providing navigational assistance. The overall maritime situation is complicated further by many ships turning off automated tracking systems, obscuring accurate monitoring of traffic flows.
In the oil markets, Brent crude futures fell to about $76 per barrel on Thursday, down from a spike earlier in the week triggered by the conflict, but still above the prewar price of $70. West Texas Intermediate crude also eased to around $72 per barrel, compared to $67 before hostilities escalated. Gasoline prices in the United States increased modestly, reaching a national average of $3.85 per gallon—29 percent higher than before the conflict began in February. Diesel prices also edged up to $4.81 per gallon.
Financial markets showed mixed reactions to the ongoing tensions. The S&P 500 index closed around 0.8 percent higher on Thursday, bouncing back from losses on Wednesday when volatility measured by the VIX index spiked to a two-week high. Asian markets were divided, with Japan and South Korea gaining ground, while Hong Kong declined. European stock markets recovered some losses from the previous day’s sharp downturn.
Bond investors remain concerned about inflation risks amid rising oil prices. The yield on the 10-year U.S. Treasury note climbed to nearly 4.6 percent, marking its highest point since May, reflecting increased anxiety about cost pressures in the economy. The yield increase corresponds with falling bond prices, indicating a cautious stance among fixed-income investors amid geopolitical uncertainty.