Why Oil Prices Are Rising This Week: Iran War, Hezbollah, and Strait of Hormuz

TLDR

• Brent crude traded around $95 a barrel after a near 3% drop Thursday
• Hezbollah rejected a US-brokered ceasefire between Israel and Lebanon
• WTI gained more than 6% this week due to ongoing Middle East tensions
• Oil flows through the Strait of Hormuz remain well below pre-war levels
• Trump said US-Iran talks are going well, but little diplomatic progress is visible

Oil prices steadied on Friday after a volatile week driven by conflicting signals from Middle East peace negotiations.

Brent crude held near $95 a barrel after falling almost 3% on Thursday. West Texas Intermediate was trading close to $93.

Why Prices Dropped Then Recovered

Prices had pulled back after some optimism around US-Iran talks. But Hezbollah’s rejection of a Lebanon-Israel ceasefire deal pushed prices back up.

The Iran-backed group said it would not withdraw troops from Lebanon and rejected ongoing negotiations between Beirut and Jerusalem.

Israel continued air strikes in southern Lebanon in response. Hezbollah launched retaliatory attacks, and Israeli officials signaled no halt to operations was planned.

Iran had also reportedly paused indirect talks with the US earlier in the week, accusing Washington of violating a prior ceasefire with fresh strikes.

The US struck several targets inside Iran this week. Iran’s Revolutionary Guard retaliated against American targets in Kuwait and Beirut.

Strait of Hormuz Still a Key Factor

The Strait of Hormuz carried about a fifth of the world’s crude oil before the war began. Oil flows through the channel remain well below those levels.

US intervention helped increase ship crossings, but the improvement has been limited. Analysts say a real price drop depends on meaningful recovery in Hormuz traffic.

Oil futures are still down about 20% since early April, when the US and Iran agreed to a ceasefire. WTI has gained more than 6% this week alone as tensions flared again.

An explosion at Oman’s Mina Al Fahal oil export terminal briefly disrupted loadings this week. The facility is one of the few points where Middle Eastern crude can still be loaded outside of the Strait. Operations resumed shortly after.

What Traders Are Watching

Analysts say the mixed signals from peace talks are not pushing prices lower, but they are capping any sharp upside.

Brent and WTI were both on track for weekly gains of between 3% and 6%. With no ceasefire in place and fighting continuing in Lebanon, supply disruptions look set to persist.

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