Oil markets moved higher on Friday morning amid renewed concerns about military escalation in the Middle East after Iran released video showing commandos boarding a large cargo ship in the Strait of Hormuz and following reports that Tehran's air defences had engaged "hostile targets."
By 0107 GMT Brent crude futures were trading at $106.3 a barrel, up $1.23 or 1.17%. West Texas Intermediate futures were at $96.92, a gain of $1.07 or 1.12%.
Both benchmark contracts had closed more than 3% higher on Thursday and jumped roughly $5 a barrel after reports emerged that air-defence systems were engaging targets over Tehran and accounts of a power struggle between Iran's hardliners and moderates.
U.S. President Donald Trump commented that Iran may have rearmed "a little bit" during a two-week ceasefire, while asserting that the U.S. military could eliminate it "in just a single day." He also said he would not set a "timetable" for ending the conflict and that he sought to make "a great deal." When asked how long he was willing to wait for a long-term peace agreement with Iran, he said, "Don’t rush me."
Market analysts pointed to the ceasefire phase as increasingly appearing to be a preparatory period for further hostilities. In a note, Haitong Futures warned that if U.S.-Iran talks do not achieve key progress by the end of April and fighting resumes, oil prices could reach new highs for the year.
Iran posted footage on Thursday showing commandos in a speedboat boarding a large cargo ship after the collapse of peace talks, a move that highlighted Tehran's control of the Strait of Hormuz. The strait is a strategic chokepoint through which about 20% of global oil and gas typically flows.
As governments and investors continue to seek an enduring settlement, analysts cautioned that prolonged disruption to shipping lanes could tighten supplies. Mingyu Gao, chief researcher for energy and chemicals at China Futures, said that sustained interruptions in the Strait of Hormuz could push global crude and refined-product inventories below five-year seasonal lows by late May or early June, which would reintroduce a supply-risk premium into oil prices.
Separately, President Trump said in a social media post that Israel and Lebanon had agreed to extend their ceasefire by three weeks following a high-level meeting in the White House Oval Office. Prior to that announcement, Israel had warned it was prepared to resume attacks on Iran.
The combination of the maritime incident, reports of air-defence engagements and political tensions within Iran contributed to renewed upward pressure on oil prices as markets weighed potential disruptions to flows and inventories.