FINWIRES · TerminalLIVE
FINWIRES

EMEA Oil Update: Futures Retreat After Three Days of Gain

By

Oil futures retreated on Wednesday, snapping a three-session winning streak as traders took profits following a sharp geopolitical rally.

The Brent futures contract dropped about 1.3% to $106.34 per barrel. Murban futures closed at $106 on May 12 and was not trading as of the time of publishing this oil price update.

The slight price correction comes despite a deteriorating diplomatic landscape.

Strategists noted that markets are still digesting President Trump's recent rejection of Tehran's counteroffer and his warning that a regional ceasefire is on "massive life support."

The breakdown in negotiations is largely attributed to Iran's refusal to cede control over its nuclear program and its insistence on maintaining authority over traffic through the Strait of Hormuz.

"The breakdown in negotiations suggests an extended disruption to oil supplies from the Persian Gulf is likely," ANZ analysts said.

On the ground, the impact of the US naval blockade is becoming starkly visible.

Satellite imagery obtained by Bloomberg suggests that shipments from Iran's primary export terminals have reached a virtual standstill over the last several days, a significant shift for a nation that had managed to maintain exports of roughly 1.8 million barrels per day despite the war.

This supply chokehold is rapidly depleting the global inventory buffer.

ANZ said that global crude stocks fell by nearly 200 million barrels in April alone at a daily rate of 6.6 mb/d.

Adding to the bullish fundamental backdrop, the American Petroleum Institute reported late Tuesday that US crude inventories decreased by 2.19 million barrels for the week ended May 8.

"If Hormuz remains shut, the second quarter of 2026 will see the largest quarterly crude inventory drawdown in history at 6.5mb/d," ANZ noted.

The oil market now awaits the US Energy Information Administration's petroleum inventory report, scheduled for release on Wednesday.

Related Articles

Oil & Energy

Global Oil Stocks Plummet at Record Pace as Hormuz Crisis Shuts in 14 Million Barrels, Says IEA

More than ten weeks into the Middle East conflict, the global energy market is grappling with an unprecedented supply shock that has shut in 14.4 million barrels per day of Gulf production, according to the International Energy Agency's oil market report released on Wednesday.The effective closure of the Strait of Hormuz has already resulted in cumulative supply losses exceeding one billion barrels, forcing global oil inventories to draw down at a record pace of 4 mmbbl/d over March and April, the agency noted.The supply vacuum has triggered a massive realignment of global trade flows, with Atlantic Basin exports surging by 3.5 mmbbl/d since February to reach hard-hit East of Suez markets, it said.Producers in the US, Brazil, Canada, and Kazakhstan have pushed output to record levels, while a temporary waiver on Russian oil-on-water sanctions has provided marginal relief, IEA added.Despite these efforts, global oil supply is projected to decline by an average of 3.9 mmbbl/d for the full year 2026, as per the report.On the demand side, global oil demand is now forecast to shrink by 420,000 b/d year over year in 2026 -- a downward revision of 1.3 mb/d from pre-war estimates.The second quarter of 2026 is expected to be the most severe, with demand dropping by 2.45 mmbbl/d as the petrochemical and aviation sectors reel from high prices and supply constraints, IEA said.While demand may return to growth by the fourth quarter if a diplomatic resolution allows for a gradual reopening of the Strait in July, analysts warn that supply recovery will likely lag, ensuring continued volatility through the peak summer travel season.

Oil & Energy

EMEA Natural Gas Update: Futures Down Despite Mounting Concerns of Prolonged Hormuz Disruption

European natural gas futures edged lower on Wednesday, while still holding on to gains from previous sessions, as concerns persist about a protracted conflict and supply disruptions in the Middle East.The front-month Dutch TTF contract was down 0.17% to 46.60 euros ($54.56) per megawatt-hour, while the UK NBP front-month dropped 0.31% to 114.44 British pence ($1.55) per therm.This comes following US President Donald Trump's rejection of Iran's response to the US-backed peace proposal last week. Trump has since commented that the current ceasefire between the two sides was "unbelievably weak" and on "massive life support," hinting at a potential re-escalation in the conflict.Iran's Foreign Minister, Seyyed Abbas Araghchi, said on Tuesday that the country was working on a new set of rules to facilitate safe passage through the Strait of Hormuz, during a meeting with the Deputy Foreign Minister of Norway Andreas Motzfeldt Kravik, according to a report by Tasnim News Agency.Meanwhile, the strategically crucial Strait remained effectively closed for the 11th week running, with just 8 vessels transiting over the past 24 hours, according to the Hormuz Strait Monitor.The rally in natural gas prices has been limited as LNG cargoes began emerging from the Persian Gulf, and Qatar asking more ships to begin transiting the Strait with their transponders turned off, according to Daniel Hynes, a senior commodity strategist at ANZ.This comes at a critical juncture for Europe, as it begins refilling natural gas inventories at significantly depleted levels, of just 35.6% of capacity, compared to the five-year average of 48.1%, according to data compiled by the Swiss Federal Office of Energy.

Oil & Energy

Market Chatter: Iraq, Pakistan Strike Bilateral Energy Pacts With Iran For Passage via Hormuz

Iraq and Pakistan have reached separate bilateral agreements with Iran to facilitate the shipment of crude oil and liquefied natural gas through the Strait of Hormuz, according to a Reuters report on Tuesday.These deals underscore Tehran's evolving strategy from blocking the strategic chokepoint to actively controlling its access, as per the report.Amidst the ongoing regional conflict that has slashed energy exports by nearly 80%, these arrangements allowed two Iraqi supertankers carrying 4 million barrels of crude to transit the strait on Sunday, while two vessels of Qatari LNG are currently en route to Pakistan to meet soaring summer electricity demands, the report said.For Iraq, the agreement is a fiscal necessity, as oil revenues constitute 95% of its national budget.The report further noted that Baghdad is currently coordinating with Tehran to secure further approvals for transits, involving a rigorous documentation process.Specialized teams at the Iraqi Oil Ministry are reportedly providing Iranian naval forces with granular data on every vessel, including cargo specifications and ownership details, to navigate designated maritime routes.Similarly, while Qatar was not a direct signatory to the Pakistan-Iran pact, it reportedly informed Washington ahead of the LNG shipments to Islamabad to ensure diplomatic transparency, it said.Despite the heightened military presence and US blockades on Iranian ports, these shipments proceeded without direct payments to Iran or the Islamic Revolutionary Guard Corps, the report stated.With maritime traffic through the Strait of Hormuz currently at just 5% of pre-war levels, other energy-dependent nations are reportedly exploring similar safe passage frameworks as global Brent crude prices remain 50% higher than February levels, it added.None of the parties involved responded immediately to' request for comments.(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)