Oil prices are climbing back toward the $100 mark as traders grapple with a fundamental contradiction: a ceasefire that's supposed to ease global energy concerns is instead deepening skepticism about whether peace will actually hold.

According to OilPrice.com, West Texas Intermediate crude was trading at $99.17, up 1.33%, while Brent had climbed 0.92% to $96.80 in early Asian trading on Friday. The driver? Fresh attacks across the region and mounting doubts about the durability of the already-fragile Iran ceasefire. The United States and Iran agreed to a temporary two-week ceasefire on Wednesday, with Tehran allowing safe passage for shipping vessels through the Strait of Hormuz, according to OilPrice.com. Those two weeks are intended as a window to finalize a permanent settlement, with formal talks scheduled to follow.

But the ink on that agreement is barely dry, and the market is already questioning whether it will survive contact with reality.

Saudi Production Cuts Underscore Supply Vulnerability

The immediate catalyst for rising prices is concrete and alarming. Missile and drone strikes have cut Saudi Arabia's oil production capacity by roughly 600,000 barrels per day, according to Reuters reporting on Saudi Arabia's energy ministry statement. The damage extends beyond crude production: flows through the East-West pipeline—one of Saudi Arabia's primary export routes that moves crude from the Gulf to the Red Sea while bypassing the Strait of Hormuz—have been reduced by approximately 700,000 barrels per day, according to OilPrice.com. One of the pipeline's pumping stations was struck, limiting throughput, while direct hits to upstream assets further constrained output.

This matters because the East-West pipeline has become critical infrastructure for global oil markets. It represents a workaround to the Strait of Hormuz, the chokepoint where Iran maintains leverage. With that alternative route now compromised, the market faces a tighter supply picture than the ceasefire headlines suggest.

The Correction That May Have Gone Too Far

Yet there's a counterargument gaining traction among analysts. According to OilPrice.com, oil prices have declined by the biggest margin since the Iran war began in late February, with Brent crude for June delivery and WTI for May delivery retreating to the mid-$90s per barrel alongside falling refined product prices. Standard Chartered, cited by OilPrice.com, argues that this oil price correction is likely overdone—a signal that markets may have overreacted to ceasefire optimism without accounting for the structural damage already inflicted on supply.

The tension between these two views—that prices are simultaneously too high and too low—reflects genuine uncertainty about what comes next. The ceasefire is supposed to hold for two weeks while negotiators work toward a permanent deal. But with fresh attacks continuing and key infrastructure damaged, traders are hedging their bets.

New Supply Emerging, But Not Fast Enough

There is one bright spot on the supply horizon. Argentina's crude oil production hit 847,000 barrels daily earlier this year as the country doubles down on the largest shale oil and gas formation outside North America, according to OilPrice.com. This represents a meaningful addition to global supply at a moment when every barrel counts.

Meanwhile, ConocoPhillips is visiting Venezuela to evaluate oil opportunities, according to Reuters, suggesting that major producers are actively exploring ways to unlock additional barrels from regions that have been underutilized in recent years.

These developments signal that the energy industry is responding to the supply crunch, but the timeline matters. New production takes months or years to ramp up. The ceasefire negotiations are happening over weeks.

The Waiting Game

For now, oil markets are caught between competing narratives: relief that the worst-case scenario of a prolonged regional conflict may be avoided, and anxiety that the damage already done—to Saudi production, to pipeline capacity, to confidence in Middle East stability—won't be quickly repaired. The two-week window for ceasefire talks will be closely watched by traders, policymakers, and anyone concerned about energy costs.

Reporting based on coverage from Reuters, OilPrice.com, MarketWatch, and Financial Times.