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EMEA Oil Update: Brent Eases After 3 Days of Gains Following Israel-Lebanon Ceasefire

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Brent futures eased on Thursday after three straight days of gains as a newly brokered Israel-Lebanon ceasefire sparked hopes for broader US-Iran diplomacy, while data showed US crude inventories tightened further.

Brent futures contract eased about 1% to $96.90 per barrel. Murban futures closed at $97.17 on June 3 and were not trading by the time of publication of this oil price update.

The immediate geopolitical panic was partially cooled late Wednesday by news that Israel and Lebanon had finalized a conditional ceasefire framework.

The breakthrough raised cautious hopes that a broader backchannel deal could be brokered between Washington and Tehran, given that Iran had previously conditioned any maritime de-escalation on a complete cessation of hostilities along the Lebanese front.

"However, the broader regional conflict remains unresolved and risks to energy supplies persist," Saxo Bank analysts said.

"Traffic through the Strait of Hormuz, a vital waterway that normally handles around one-fifth of global oil and LNG shipments, has recovered modestly but remains well below pre-conflict levels, continuing to support a significant geopolitical risk premium across energy markets," they added.

As the Middle East conflict enters its fourth month, the Western hemisphere's buffer against sudden supply disruptions is rapidly drying up under the weight of robust international export demand and domestic refining runs.

In its official weekly report released on Wednesday, the US Energy Information Administration confirmed that domestic commercial crude inventories plummeted by a massive 8 million barrels for the week ended May 29, dragging total stockpiles down to 433.7 million barrels.

Market experts warn that until Middle Eastern oil flows normalize completely, global balances remain acutely exposed to sudden, violent upward price spikes as commercial stockpiles continue to thin out.

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$COP$CVX$E$TTE