Oil Markets Brace for Volatility as U.S.-Iran Ceasefire Nears Expiration

Energy markets are on high alert as the two-week ceasefire between the United States and Iran approaches its expiration date. President Trump has indicated that military operations will resume if a diplomatic resolution is not secured, sparking immediate volatility in crude benchmarks. The threat of renewed conflict centers on the Strait of Hormuz, a vital artery for 20% of the world's oil and liquefied natural gas (LNG) supplies. While strategic reserves and bypass pipelines have mitigated some initial shocks, a long-term closure would create a severe global supply deficit and potentially lead to further chokepoint closures, such as the Bab el-Mandeb in the Red Sea. Market reaction has been swift, with Brent crude climbing from below $95 to nearly $100 per barrel before settling around $97. WTI followed a similar trajectory, peaking just under $95. Analysts suggest that a full-scale resumption of hostilities could drive prices past the previous war-driven peak of $119 per barrel. The conflict has already impacted energy infrastructure, with 17% of Qatar's LNG capacity offline for at least three years. For companies like ConocoPhillips (COP), the geopolitical instability creates a complex environment; while higher crude prices generally boost revenue, the closure of the Strait of Hormuz hinders LNG exports and threatens the completion of new production trains in Qatar. Further escalation could see targeted attacks on the Kharg Island oil export hub or other Persian Gulf facilities. Such damage could take years to repair, sustaining elevated energy costs and increasing the risk profile for operators within the region.