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EMEA Oil Update: Brent Slips Despite Renewed Gulf Hostilities

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Oil futures fell on Wednesday as market participants sought clarity on negotiations between Washington and Tehran amid escalating tension in the Persian Gulf.

The Brent futures contract fell about 2% to $97.63 per barrel. Murban futures closed at $95.05 on May 26 and were not trading by the time of publication of this oil price update.

On Tuesday the US Central Command executed "self-defense" strikes in Southern Iran, targeting shore-based missile batteries and fast-attack craft allegedly deploying naval mines.

This military intervention prompted an immediate retaliatory response from Iran's Islamic Revolutionary Guard Corps which reportedly engaged an American F-35 fighter jet and downed several US surveillance drones.

Traders now evaluate a fragile 60-day ceasefire framework against a sudden flare-up of tensions directly threatening the reopening of the strategic Strait of Hormuz.

Despite this escalation, broader market panic was contained by comments from US Secretary of State Antony Rubio, who affirmed that while deep tactical gridlock persists, negotiators remain engaged in Doha and a preliminary pact could potentially materialize within a few days.

Macquarie strategists outlined a base-case scenario indicating that if a credible, verified memorandum of understanding is accepted by the market, crude prices could experience a short-lived sell-off, pushing oil down by roughly $20 per barrel in a week.

However, energy trading desks are increasingly skeptical about talk of resolution after several false dawns so far in the conflict.

HFI Research pointed out that even if an MoU is signed immediately, the logistics of the proposed 60-day negotiation window all but guarantee that no meaningful volume of shut-in Middle Eastern production will physically return to the water before mid-summer.

The oil market now awaits crude inventory data from the US Energy Information Administration.

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US Oil Update: Futures Mixed as Traders Weigh Iran Retaliation Risks

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Update: Market Chatter: US Navy Supports Tanker Movements Through Strait of Hormuz

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