Oil Climbs as Israel, Iran Pause

Oil edged higher after Israel and Iran signaled they would refrain from further escalation after a day of hostilities between the two sides.

West Texas Intermediate rose 0.8% to settle near $91 a barrel, having earlier climbed as much as 5.5%. Israeli Prime Minister Benjamin Netanyahu said Israel is holding fire against Iran for now, but will respond with force if Iran attacks again. Those comments echoed earlier sentiment conveyed by Iranian media.

The recent tit-for-tat strikes had threatened to derail talks aimed at ending the war in the Middle East and reopening the Strait of Hormuz to vital energy flows choked off by the conflict.

US President Donald Trump earlier said in a post on his Truth Social platform that both countries are looking to agree to an immediate ceasefire. He added that a peace deal was "subject to ignorance or stupidity getting in its way."

Even at the peak of the day, oil prices remained below $100, a sign of how the market has managed to avert the worst impacts of what the International Energy Agency describes as the biggest-ever supply disruption. At its highest level during the conflict, the global benchmark neared $130 a barrel.

"If tanker traffic remains restricted for the next few months, the physical oil market could tighten further," said Rob Thummel, senior portfolio manager at Tortoise Capital. "In that scenario, falling inventories would likely put upward pressure on futures prices over the next month or two."

Yemen's Houthi rebels also said prior to the Iranian halt of attacks that they would impose a complete ban on Israeli vessels in the Red Sea, though a key industry group saw little significant impact on shipping given that many vessels are currently avoiding the waterway anyway.

There's been a flare-up in hostilities over the past week across the Middle East that's threatening to derail a truce and complicate negotiations to end the war. The conflict has led to the near-closure of the crucial Strait of Hormuz, choking off most supplies of crude, fuels and natural gas to global customers.

Meanwhile, US Central Command said it disabled an oil tanker in the Gulf of Oman that allegedly attempted to sail to an Iranian port. A fire was earlier reported on the same vessel, called Marivex, which was said not to be carrying cargo. The US has redirected 134 ships since it began enforcing a blockade of Iranian ports in early April, it said.

Oil Prices

• WTI for July delivery jumped 0.8% to settle at $91.30 a barrel in New York.
• Brent for August settlement was 1.3% higher to settle at $94.25 a barrel.