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EMEA Oil Update: Crude Rises After US-Iran Clashes, Kuwait Attacks

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EMEA crude futures rose in after-hours trading on Wednesday after the US and Iran traded strikes, casting doubt on the prospects of a peace deal and stoking concerns about potential supply disruptions in the Middle East.

Brent crude futures advanced 2.02% to $97.97 per barrel, while Murban oil futures advanced 0.99% to $97.04/bbl.

Soojin Kim, research analyst at MUFG, said crude prices rose for a third consecutive session as growing doubts over a US-Iran peace deal and renewed tensions heightened concerns about prolonged supply disruptions.

The US and Iran traded strikes again earlier on Wednesday, with Kuwait and Bahrain caught in the crossfire of the most serious flare-up since a ceasefire went into effect in early April.

On Wednesday, Iran said it had targeted the headquarters of the US Navy's 5th Fleet in Bahrain and another country in its attack, without naming Kuwait. Tehran said it launched its attack in response to the US firing a missile into the engine room of another oil tanker trying to reach its ports despite the US blockade.

The Kuwait Defense Ministry said in a social media post that it had intercepted 13 ballistic missiles and 17 drones launched from Iran into Kuwaiti airspace since dawn. The US Central Command responded with strikes on an Iranian command center on Qeshm Island in the Strait of Hormuz.

"US forces successfully defeated multiple Iranian ballistic missiles and drones, and conducted self-defense strikes on Qeshm Island in response to attempted attacks by Iran across the Middle East," CENTCOM said.

However, President Trump and Secretary of State Marco Rubio said on Tuesday that peace negotiations to end the Middle East conflict were ongoing, pushing back against Iranian media reports suggesting communications had broken down.

Saxo Bank strategists said the risk premium continues to be partly offset by Trump's repeated insistence that an interim agreement remains within reach.

Meanwhile, US crude inventories dropped amid strong export and refining demand as the Middle East conflict entered its fourth month. Crude stockpiles decreased by 8 million barrels to 433.7 mmbbls in the week ended May 29, the Energy Information Administration said in its weekly report on Wednesday.

US Strategic Petroleum Reserve inventories fell to 357.1 mmbbls, down from 365.1 mmbbls a week ago, marking a weekly decline of 8 mmbbls.

On the supply front, the prolonged closure of the Strait of Hormuz is raising concerns that the world will need to tap crude inventories further, after the International Energy Agency said global oil inventories could hit critical levels ahead of the peak summer demand period.

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