The boss of Abu Dhabi’s state-owned oil company has said the strait of Hormuz is “not open” despite the US-Iran ceasefire agreed earlier this week, as uncertainty over the truce pushed the price of Brent crude towards $100 a barrel on Thursday.
Sultan Al Jaber, the chief executive officer of the Abu Dhabi National Oil Company (Adnoc), said passage through the crucial waterway was subject to “permission, conditions and political leverage” by Iran. He said energy security and global economic stability depended on the strait being opened “fully, unconditionally and without restriction”.
Al Jaber wrote on LinkedIn: “The weaponisation of this vital waterway, in any form, cannot stand. This would set a dangerous precedent for the world – undermining the principle of freedom of navigation that underpins global trade and, ultimately, the stability of the global economy.
“An estimated 230 vessels sit loaded with oil and ready to sail. They, and every vessel that follows, must be free to navigate this corridor without condition. No country has a legitimate right to determine who may pass and under what terms.”
Iran in effect closed the strait, through which a fifth of oil and gas would normally flow, after the US and Israel began their attacks at the end of February. At least 1,400 ships are estimated to be anchored on both sides of the passage between the Gulf and the Gulf of Oman.
Tehran’s 10-point ceasefire plan would reportedly permit Iran and Oman to charge a fee of up to $2m (£1.5m) a ship on vessels moving through the strait.
Concerns that few ships have passed through the strait since the US-Iran truce was announced pushed up energy prices on Thursday, while stock markets retreated across Asia and Europe as the two-week ceasefire in Iran looked increasingly shaky, with Israel continuing attacks on Lebanon and the US and Iran threatening a return to military action.
A day after the US and Iran announced an 11th-hour ceasefire, including an agreement to reopen the strait of Hormuz, many questions remain and there have been signs that the truce has already been broken, causing jitters in the markets.
Brent crude, the global benchmark, rose by over 4% on Thursday to above $99 a barrel, while New York light crude climbed by 8% to as high as $102.20 a barrel. On Wednesday, Brent had tumbled 13.29%, falling to a four-week low of $94.75 a barrel.
Gas prices also crept up again, with the month-ahead UK gas contract up almost 1% at 115.23p a therm, having dropped 15% on Wednesday after the ceasefire was announced.
European natural gas futures rose to €46.5 a megawatt hour on Thursday, rebounding from a five-week low. They had plummeted almost 15% to €45.30 a megawatt hour on Wednesday.
Graph showing price of oil
Andrew Bailey, the chair of the Financial Stability Board, an international body that monitors the global financial system, said the war in the Middle East had been “a very big shock” in the past few weeks that had prompted “much greater market volatility”.
Appearing before the EU parliament’s committee on economic and monetary affairs, Bailey – who is also the Bank of England governor – said: “At least we got up yesterday and found the world was still with us, but it obviously is very volatile. Yesterday was a good case in point to illustrate that.”
He added that “the banking system is resilient”.
Bailey also said, speaking personally, that one of the lessons from the Iran war was that it had changed the economics in favour of renewable energy, to reduce the UK’s reliance on natural gas.
The UAE and Kuwait said their air defences had intercepted drones from Iran, while Tehran’s parliament speaker, Mohammad Bagher Ghalibaf, said Israel and the US had violated several points of the agreement.
The Revolutionary Guards threatened a “regret-inducing response” if Israel did not stop its strikes against Lebanon. The Fars news agency reported that the passage of oil tankers through the strait was halted because of Israel’s barrage of strikes on Lebanon on Wednesday, the worst since the war started, killing at least 254 people and wounding at least 837.
Donald Trump posted on his Truth Social platform that US forces would “remain in place in, and around, Iran, until such time as the REAL AGREEMENT reached is fully complied with”. He threatened that if it were not complied with, the military action would be “stronger than anyone has ever seen before”.
In Asian stock markets, Japan’s Nikkei fell 0.7% after Wednesday’s 5.4% bounce, while South Korea’s Kospi lost 1.6% after rising 7.5% the day before, and Hong Kong’s Hang Seng dropped 0.5% lower.
European stocks also fell, as the optimism from Wednesday’s rally faded. The UK’s FTSE 100 index closed roughly flat, while the German Dax fell 1.1% and France’s Cac dropped 0.2%. The pan-European Stoxx 600 index dropped by 0.1% after Wednesday’s near 4% rise, its best day since 2022.
US markets were climbing in early afternoon trading on Wall Street.
There are signs of progress as the White House press secretary, Karoline Leavitt, said that the vice-president, JD Vance, would lead a delegation to Islamabad, with a first round of talks scheduled for Saturday morning.
Mohit Kumar, the chief European economist at Jefferies, said: “Despite the fragile nature of the ceasefire, we believe that the truce will hold. Not because we believe that a solution has been found but because of the MAD (mutually assured destruction) principle.
“We have reached a stage where both parties would want a ceasefire as carrying on the war assures a negative fallout for both parties. Trump wants a deal as he does not have support from his Maga base to continue to war. US and Israel have realised that without a solution to cheap drone interceptors and some way to bypass the strait of Hormuz, it’s a war that cannot be won.”
