ASX 200 energy shares are leading the market after Israel hit Lebanon again, and the Strait of Hormuz remains at a standstill.
This follows a substantial sell-off for ASX 200 energy shares yesterday.
On Wednesday, the S&P/ASX 200 Energy Index (ASX: XEJ) dropped 7.3% after the US and Iran agreed to a two-week ceasefire.
The rest of the market celebrated the news, with the benchmark S&P/ASX 200 Index (ASX: XJO) finishing the session 2.8% higher.
Today, we've seen a reversal of trends.
ASX 200 energy shares are up 2.4% while the ASX 200 is down 0.05%.
Oil prices have also rebounded today after a sharp fall yesterday.
Brent Crude is currently up 2.7% to US$97.35 per barrel.
Image source: Getty Images
Why are ASX 200 energy shares leading the market today?
There is uncertainty in the market as investors wonder how fresh Israeli strikes on Lebanon will impact the ceasefire.
Meanwhile, the Strait of Hormuz remains largely obstructed.
As part of the ceasefire deal, Iran agreed to allow safe passage of shipping through the Strait, coordinated by its armed forces.
On Thursday, Trading Economics analysts said:
Iranian media reported that oil tanker traffic through the strait had been suspended following the attacks, amid disputes between Tehran and the American-Israeli side over whether the truce extends to Lebanon.
A senior Iranian official also stated that three provisions of the ceasefire agreement have already been breached.
Meanwhile, US Vice President JD Vance said there are indications the strait may begin reopening as he leads a US delegation to Islamabad for direct talks with Iran this weekend.
The Strait of Hormuz is not technically closed.
However, shipping companies have chosen not to sail through it for fear of Iranian attacks and a lack of insurance coverage.
About 20% of global crude oil and gas is shipped via the Strait.
The war has triggered the worst oil shock since the 1970s.
ASX 200 energy shares whipsaw on ceasefire tensions
Let's take a look at what's happened with the market's largest ASX 200 energy shares over the past two days.
On Wednesday, the Woodside Energy Group Ltd (ASX: WDS) share price plummeted 10.4% to close at $32.06.
Today, Woodside shares have regained 3.8% to $33.29, at the time of writing.
Yesterday, the Santos Ltd (ASX: STO) share price fell 4.6% to $7.76. Today, Santos shares are 2.5% higher at $7.95.
The Karoon Energy Ltd (ASX: KAR) share price dropped 13.4% to $1.90 on Wednesday.
Today, Karoon Energy shares are $1.98, up 4.3%.
Ampol Ltd (ASX: ALD) shares fell 4.2% yesterday to $32.12, but today they're up 3.6% to $33.26.
The Viva Energy Group Ltd (ASX: VEA) share price tanked 9.1% to $2.42 yesterday.
Today, Viva Energy shares are $2.49 apiece, up 2.7%.
ASX 200 coal share Yancoal Australia Ltd (ASX: YAL) fell 9.8% to $7.49 on Wednesday.
Today, Yancoal shares are in the red again, down 0.1% to $7.48.
The New Hope Corporation Ltd (ASX: NHC) share price dropped 9.6% to $5.30 yesterday.
On Thursday, New Hope shares are slightly higher, up 0.2% to $5.31.
