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EMEA Oil Update: Crude Drops as US-Iran Peace Talks Offset Middle East Tensions

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EMEA crude futures retreated in after-hours trading on Thursday, as markets weighed signs of continued peace talks between the US and Iran against concerns that renewed hostilities in the Middle East could threaten energy supplies.

Brent crude futures fell by 1.7% to $89.22 per barrel, while Murban crude futures slipped by 0.3% to $87.70/bbl.

Soojin Kim, research analyst at MUFG, said that crude prices dropped as markets assessed a new wave of US military strikes on Iranian military targets that stopped short of damaging critical civilian infrastructure.

Pakistani Foreign Ministry spokesperson Tahir Andrabi said on Thursday that peace negotiations between the US and Iran are "ongoing" to restore stability, particularly in the Strait of Hormuz, according to media reports.

Andrabi urged the warring sides to find a solution through dialogue and diplomacy, while affirming Pakistan's commitment to a diplomatic solution.

Pressuring prices, signs of increased flows through the Hormuz have partly offset concerns over a fresh wave of hostilities from Iran to the Black Sea.

Traffic through the Middle East energy chokepoints picked up, with Kpler data showing 12 and 41 confirmed crossings in the Hormuz and Bab el-Mandeb on July 28, respectively. The US Central Command has redirected 18 commercial vessels, disabled 2, and boarded 2 as of July 28.

Meanwhile, the conflict across the Middle East escalated after the US retaliated against Iranian strikes on American forces with a fresh wave of attacks.

Iran's Islamic Revolutionary Guard Corps threatened further escalation on Thursday after a wave of retaliatory US strikes on the country overnight. The IRGC said that it "will punish the aggressor today," adding that countries aiding the US in the conflict would also "receive a harsh response," according to local media.

Tehran also said that it maintains "full control" of the Strait, and that "a stranger who has come from thousands of kilometers away will not be allowed to interfere."

On Wednesday, the US launched a wave of strikes against Iranian targets in retaliation for missile attacks on American forces in the region.

US Central Command described the operation as a "powerful response" to Tuesday's attempted Iranian attacks on US forces in the Middle East.

Saxo Bank strategists said that US-Iran fighting threatened global energy supplies after an attack on US forces in Jordan prompted a strong response vow from President Trump.

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