Crude oil futures hovered near multi-week highs on Thursday after President Donald Trump declared the US-Iran ceasefire "over" following direct military strikes between US and Iran.
Brent crude futures rose 0.7% to $78.55 per barrel after hitting more than $80 a barrel in the previous session, the highest since June 22. Murban crude futures eased 0.5% to $73.24/bbl after hitting their highest since June 17 on Wednesday.
Trump said that as far as he is concerned, the Pakistan-mediated interim MOU with Iran is "over", dismissing the fragile ceasefire accord as "a waste of time".
Speaking ahead of a NATO summit in Turkey, Trump signaled a sharp escalation in Middle East military action.
Trump's remarks on Wednesday that the MOU with Iran was over do not necessarily signal the end of negotiations between the two countries, and little should be read into them until more clarity emerges, energy sector analysts told.
Shipping traffic through the crucial Strait of Hormuz has partially rebounded to half of its pre-war baseline, according to an IRGC statement reported by Al Jazeera.
However, shipping data indicates that most active vessel movements have been compressed along an Iran-approved route hugging the waterway's northern coastline. Conversely, the US-backed Omani maritime corridor, which serves as the location of recent Iranian attacks, remained largely quiet.
The group rejected responsibility for the lingering maritime gridlock, attributing the bottleneck to US intervention and political "adventurism" regarding regional transit routes, the report noted.
On the geopolitical front, Iran launched retaliatory drone and missile attacks on US military assets in neighboring Gulf states, including a fuel storage facility in Bahrain.
The US Central Command earlier had said it launched a second consecutive day of targeted airstrikes against Iran, acting under direct presidential instructions.
"The disruption is a reminder that the Strait never fully reopened and that the recent removal of the geopolitical risk premium may have been premature," Saxo Bank analysts said.
Saxo Bank analysts further added that the abrupt rally was accelerated by heavy short covering, as hedge funds had been holding unusually low bullish exposure and elevated short positions prior to the flare-up.
Investment bank Macquarie emphasized that diplomacy over the control of this vital waterway will ultimately dictate whether the current energy crisis persists or stabilizes.