Oil Holds Near $100 as Iran Tensions Keep Markets on Edge Despite Ceasefire Hopes

Mumbai, April 22: Crude oil prices were on the boil on Wednesday as the Iran ceasefire extension failed to convince markets about peace returning to the Middle East.

Oil kept hovering around the $100 per barrel level as geopolitics remained uncertain, weighing on sentiment. To be sure, prices did edge lower after elevating as benchmark Brent crude slid to $98 per barrel levels and US West Texas Intermediate traded around $89 per barrel. But oil refused to give up a chunk of its gains as investors remained doubtful of the durability of the ceasefire extension between the US and Iran.

So, in effect, the humble retreat of prices does not change the trajectory by much as risk premium persists with oil.

Uncertainty Remains

The core issue remains uncertainty. While the ceasefire extension has temporarily eased fears of an immediate escalation, markets are far from convinced about its durability. Sporadic violations, continued military posturing, and unresolved disagreements between the two sides have kept traders cautious. As a result, oil prices are reacting less to headlines of peace and more to the risk that supply disruptions could quickly return.

At the heart of the volatility is the Strait of Hormuz—a narrow but critical shipping lane through which roughly a fifth of global oil supply typically flows. Any disruption here has outsized consequences for global energy markets. The ongoing standoff, including a US naval blockade and Iran’s control over shipping movements, has significantly constrained traffic, creating persistent supply concerns.

Market Sensitive

Recent price action underscores just how sensitive the market is to developments in the region. Oil prices have swung sharply over the past week—falling nearly 9–10 percent when the strait was briefly reopened, only to rebound as tensions resurfaced and shipping disruptions resumed. This whipsaw movement highlights a market that is trading on geopolitics rather than fundamentals.

Despite the ceasefire, the fact that crude continues to hover near $100 suggests that traders are building in a cushion for potential supply shocks. Analysts note that even in a best-case scenario, prices may remain structurally higher than pre-conflict levels due to ongoing uncertainty and constrained flows.

Tightening Inventories

Adding to the complexity are tightening inventories and strong underlying demand signals, particularly from major consuming regions. A recent drawdown in US crude stocks has also lent some support to prices, reinforcing the idea that supply-demand balances remain tight beyond the geopolitical narrative.

For global markets—and especially import-dependent economies like India—this creates a challenging environment. Elevated oil prices feed into inflation, pressure currencies, and complicate central bank policy trajectories.

In the near term, oil is likely to remainheadline-driven and highly volatile, with every development around the Iran ceasefire and the status of the Strait of Hormuz acting as a potential trigger. Until there is clear and sustained de-escalation, crude prices may continue to trade with a firm bias, even if day-to-day moves remain choppy.

Source:

• https://oilprice.com/