Oil Steadies After Hezbollah Rejects US-Brokered Ceasefire

Oil prices stabilised on Friday, erasing only a fraction of Thursday’s sharp decline, after Hezbollah rejected a US-brokered ceasefire proposal in Lebanon. The rejection punctured optimism that had briefly gripped markets a day earlier, when news of an Israel-Lebanon agreement sent Brent crude tumbling $3.20 to $94.61 a barrel and West Texas Intermediate down $3.71 to $92.31. In early Friday trading, Brent slipped a further 21 cents to $95.24, while WTI eased 10 cents to $92.94, though both later edged into positive territory in a session of nervous, directionless trade.

Two incidents underscored the fragility of any détente. Hezbollah leader Naim Qassem publicly rebuffed the ceasefire, dashing hopes that a winding-down of the Israel-Lebanon front might unlock broader US-Iran diplomatic progress. Simultaneously, Oman’s Mina al Fahal terminal suspended loading operations after what was described as a suspected drone attack near its single-buoy mooring berths. While the Omani facility lies outside the Strait of Hormuz, the disruption deepened concern over the vulnerability of regional energy infrastructure: nearly one-fifth of global oil supply transits the narrow waterway, and shipping through it remains severely constrained.

Seen from Washington, the stalled nuclear negotiations with Tehran remain the strategic fulcrum. Any agreement would likely ease sanctions on Iranian crude, potentially bringing millions of barrels back onto world markets and reducing the risk premium embedded in futures. Yet, as analysts in London note, the proxy dynamic exemplified by Hezbollah’s rejection shows how local spoilers can derail great-power diplomacy. From Tehran’s perspective, domestic economic pressures and the symbolic value of higher oil revenues compete with ideological commitments to the “axis of resistance,” leaving the trajectory uncertain.

Despite Friday’s indecision, both benchmark crude contracts were on course to register their first weekly gain in three weeks, with WTI up more than 6 per cent from last Friday’s close. The rally, which accelerated mid-week on the back of the Mina al Fahal explosion and renewed fighting, reflects a market that has repriced geopolitical risk faster than most diplomats can draft communiqués. Without substantive progress in peace talks, scattered security incidents will likely keep a floor under oil prices, even as demand-side concerns linger from China to Europe.