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EMEA Oil Update: Brent Rebounds Following US-Iran Military Escalation

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Brent futures gained on Monday, reversing a six-week low as US-Iran hostilities renewed threatening ceasefire talks.

Brent futures contract climbed over 3% to $93.94 per barrel. Murban futures closed at $90.05 on May 29 and were not trading by the time of publication of this oil price update.

The price rebound was triggered by a rapid escalation of military tensions in Middle East over the weekend, analysts said.

The US Central Command confirmed in a post on X that it conducted self-defense strikes against Iranian radar and drone control sites on Goruk and Qeshm Island, following the shootdown of a US MQ-1 drone over international waters.

In response, Iran's Islamic Revolutionary Guard Corps reportedly said on Monday that it targeted an airbase linked to a US attack on a Sirik Island telecoms tower.

These clashes have cast a shadow over diplomatic efforts.

Although US President Donald Trump stated on Friday that he would soon decide on a preliminary deal to extend an early-April ceasefire, analysts remain skeptical.

ANZ analysts said that doubts persist over Iran's willingness to accept the new US proposal, and Iran's Foreign Ministry Abbas Araghchi confirmed that no final understanding has been reached.

Compounding the geopolitical premium, global oil supplies remain severely constrained.

The critical Strait of Hormuz remains closed, disrupting over 15 million barrels per day of world oil supply.

While a growing number of vessels have attempted the risky transit in recent weeks, several recent attacks have underscored the persistent dangers to shipowners and crews, ANZ noted.

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Crude oil benchmarks posted their second weekly loss in a row on Friday, amid conflicting signals over a potential peace deal framework between the US and Iran.West Texas Intermediate settled at $87.76 per barrel, down from $97/bbl the previous week, while Brent closed at $91.99/bbl, down from $101.14/bbl a week earlier.Brent futures were headed for a weekly loss of over 11%, while West Texas Intermediate futures dropped by over 9%.Saxo Bank strategists said oil fell to a five-week low after the US and Iran tentatively agreed to extend their ceasefire by 60 days, with Brent heading for its biggest monthly decline since 2020.The week was marked by shifting headlines that drove sharp intraday volatility in the paper market, while underlying physical oil fundamentals limited downside.Mid-week optimism, sparked by reports of a draft peace agreement in Iranian state media, briefly triggered a sell-off on Wednesday before reversing as the conflict escalated into active warfare.Following President Donald Trump's dismissal of the peace rumors, the US military launched pre-dawn strikes against an Iranian drone base near Bandar Abbas airport.In retaliation, Iran's Islamic Revolutionary Guard Corps executed a counterstrike on Thursday, targeting a regional US airbase with missiles.By late week, sentiment shifted again as US and Iranian negotiators reportedly closed in on a tentative memorandum of understanding.This unsigned draft agreement aims to establish a 60-day ceasefire extension and guarantee unrestricted, toll-free passage for commercial oil tankers through the strategic Strait of Hormuz, analysts said.However, ING analysts noted that the framework lacks official verification from Tehran and remains entirely dependent on a formal sign-off from Trump, who earlier in the week rejected a rumored peace deal as a "complete fabrication."On Friday, Trump said the retaliatory US naval blockade against Iran in the Gulf of Oman will be lifted, noting that vessels previously affected by the blockade could now return home."Ships caught in the Strait due to our amazing and unprecedented Naval Blockade, which will now be lifted, may start the process of 'heading home!'," Trump said in a Truth Social post on Friday.He added that Iran must permanently forgo nuclear weapons and allow unrestricted shipping traffic through the Strait of Hormuz for him to approve a deal to end the ongoing conflict."The Strait of Hormuz must be immediately open, no tolls, for unrestricted shipping traffic in both directions," Trump said.Security risks in the Strait of Hormuz remained elevated.The US Naval Forces Central Command on Friday kept the threat level in the Strait of Hormuz at "critical," warning that ongoing military activity could increase risks for commercial vessels operating in the area."Military operations will be conducted within the area north of the Musandam Peninsula in the Strait of Hormuz," US Centcom said in an advisory published by the Joint Maritime Information Center.It described Iran's efforts to assert control over the Strait as "dangerous" and "illegal."The advisory also alleged that Iran continues to place mines in the Strait, hindering safe passage."Iran continues to impede mine clearance and safe transit through the Strait of Hormuz," the advisory said.Trump, in his earlier post, said that any mines placed in the Strait would be removed."All water mines (bombs), if any, will be terminated (we have removed, through detonation, numerous such mines with our great underwater mine sweepers. 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US Oil Update: Crude Settles Lower as Markets Assess US-Iran Peace Deal Progress

Crude oil futures settled lower in after-hours trading on Friday as markets weighed progress in peace negotiations between the US and Iran to end the three-month conflict, which could pave the way for the reopening of the vital Strait of Hormuz.Front-month West Texas Intermediate crude futures dropped by 1.28% to $87.76 per barrel, while Brent futures were down 1.84% to $91.99/bbl.Saxo Bank strategists said oil fell to a five-week low after the US and Iran tentatively agreed to extend their ceasefire by 60 days, with Brent heading for its biggest monthly decline since 2020, as expectations grew that the agreement could pave the way for a gradual reopening of the Strait of Hormuz.President Trump reportedly ended a meeting in the White House Situation Room without announcing his final decision on whether to approve a deal to pause the ongoing conflict in the Middle East.Earlier on Friday, Trump said on Truth Social that he would make his "final determination" during that meeting, after outlining conditions for a potential Iran peace deal."I will be meeting now, in the Situation Room, to make a final determination," Trump said in a social media post on Truth Social.The US President said that Washington would lift the retaliatory US naval blockade in the Gulf of Oman, noting that vessels previously affected by the blockade could now return home."Ships caught in the Hormuz Strait due to our amazing and unprecedented Naval Blockade, which will now be lifted, may start the process of 'heading home!'," he said.ING strategists said the oil market is continuing to edge lower amid growing optimism that the US and Iran are moving toward a deal, noting that the reopening of the Strait would offer immediate relief to global energy markets.Meanwhile, Iran's Speaker of Parliament Mohammad Bagher Ghalibaf said in a social media post that Tehran seizes concessions not through dialogue but with missiles, adding, "in negotiations, we merely make them understand"."We have no trust in guarantees or words, only actions are the measure," Ghalibaf said in a social media post X. "No action will be taken before the other side acts."Saxo Bank strategists said that though significant hurdles remain, the market is reacting to the prospect of a supply surge once hundreds of tankers loaded with crude oil and refined fuels are released from the Persian Gulf.