FINWIRES · TerminalLIVE
FINWIRES

EMEA Oil Update: Oil Dips as Traders Assess Potential US-Iran Peace Deal

By

Global crude benchmarks edged lower on Friday as traders assessed reports of a diplomatic breakthrough in the Persian Gulf.

Front-month Murban crude futures fell 1.7% to $92.50 per barrel, while Brent futures dropped 1.3% to $92.47/bbl. Both contracts were headed for their second straight week of losses.

ING analysts said that the "oil market continues to edge lower amid growing optimism that the US and Iran are moving toward a deal."

US and Iranian negotiators are reportedly close to a memorandum of understanding that would extend the ceasefire for 60 days and allow "unrestricted" passage of commercial vessels through the Strait of Hormuz without paying tolls to Iran.

However, ING noted that the deal faces structural hurdles, highlighting that there has been no official confirmation or supporting detail released from the Iranian side.

"Optimism continues to grow after reports that the US and Iran are set to extend a ceasefire, which will include the reopening of the Strait of Hormuz. However, President Trump still needs to sign off on the deal," ING added.

The fragile nature of the peace talks was starkly underscored on the geopolitical front, where active military operations continue to clash with diplomatic headlines.

On the supply side, US crude oil stockpiles fell by 3.3 million barrels to 441.7 mmbbls in the week ended May 22, the Energy Information Administration said in its weekly report on Thursday.

Oil inventories are nearing "unheard of" levels that will lead to increased prices in the next few weeks, Neil Chapman, senior vice president of Exxon Mobil (XOM), said Thursday at the Bernstein Strategic Decisions Conference in New York.

Related Articles

Oil & Energy

Market Chatter: German State Utility Warns of Slow Gas Reserves Refills Despite EU Assurances

Germany's state-owned utility company Uniper says the country's gas storage caverns are being refilled too slowly, raising the possibility of a shortage by next winter when withdrawals of these volumes begin, Reuters reported on Thursday, citing Frankfurter Allgemeine Zeitung.The statement raises some doubt over reassurances from the European Commission this week that there was "no immediate concern" over refilling of the bloc's reserves that supplement purchases over winter when power and heating demand rises.While the Commission's statement referred to the bloc as a whole, Germany is by far its most populous member and consumer of gas.Storage levels are rising since March, but too slow, according to the report, citing CEO Michael Lewis telling the German newspaper. If the reserves are not filled quickly, the bloc will have supply issues come winter.Data from Gas Infrastructure Europe shows storage levels just above 38% capacity, compared with nearly 47% at the same time last year while in Germany, Reuters said that level was 30.64% down from 38.65% a year earlier.Unlike last year when energy markets were operating in relatively normal times, Iran's effective closure of the Strait of Hormuz has halted movement of about a fifth of the world's hydrocarbon energy supplies.That has pushed Asian customers, the main buyers of Middle Eastern gas, to turn to North America, thrusting them and European importers into a bidding war.has emailed Uniper seeking further comment on the refilling of reserves.(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.)

Oil & Energy

US Oil Update: Futures Settle Lower as Market Weighs Reports About Iran Peace Deal

Crude oil futures settled lower in after-hours trading on Thursday as traders digested reports about a potential memorandum of understanding between the US and Iran to extend their ceasefire by 60 days.Front-month West Texas Intermediate crude futures eased 0.17% to $88.53 per barrel, while Brent futures fell 1.13% to $93.22/bbl.US crude oil stockpiles fell by 3.3 million barrels to 441.7 mmbbls in the week ended May 22, the Energy Information Administration said in its weekly report on Thursday.Strategic Petroleum Reserve inventories dropped to 365.1 mmbbls for the week ended May 22, down from 374.2 mmbbls a week ago, marking a weekly decline of 9.1 mmbbls, EIA data showed.Crude inventories are now about 2% below the five-year average for this time of year, the EIA said.Iran's armed forces fired missiles at a US aircraft late Thursday local time, the local media reported, adding that the search for the wreckage of the destroyed aircraft is ongoing, with no confirmation from the US.The latest military action in southern Iran came hours after the US Central Command said that Iran had launched a ballistic missile toward Kuwait and deployed attack drones in and around the Strait of Hormuz.US and Iranian negotiators have agreed to a memorandum of understanding that would extend the ceasefire for 60 days and allow "unrestricted" passage of commercial vessels through the Strait of Hormuz without paying tolls to Iran, according to media reports earlier on Thursday.However, the agreement between the US and Iran still needs final approval from President Trump, who has told mediators he wants a few days to make the final decision.The White House confirmed the development toin an emailed response, citing US officials.However, US Treasury Secretary Scott Bessent declined to confirm reports of the tentative agreement, saying it would be "a mistake to get out ahead of the president.""Everything depends on what the president wants to do," Bessent said during a White House press briefing on Thursday.The tentative agreement between the US and Iran could bring the two sides closer to reopening the Hormuz and help alleviate a global energy crisis that has sent fuel costs to record highs.The International Energy Agency said in its May Oil Market Report that with Hormuz tanker traffic still restricted, cumulative supply losses from Arabian Gulf producers already exceed 1 billion barrels, with over 14 million barrels per day of oil now shut in.Meanwhile, the US Department of the Treasury imposed additional sanctions on oil sales tied to Iran's military, alleging that Tehran was using illicit crude revenue to rebuild its armed forces.The sanctions follow the blacklisting of Iran's Persian Gulf Strait Authority by the Treasury for allegedly extorting commercial vessels in the Hormuz to fund the Islamic Revolutionary Guard."Iran's military generates revenue through Iranian crude oil sales via an array of front companies to help fund its reconstitution and threaten its neighbors," the Department said in a statement.

Oil & Energy

US Treasury Targets Iran Military Oil Revenue; Extends Lukoil License

The US Department of the Treasury's Office of Foreign Assets Control on Thursday imposed additional sanctions on oil sales tied to Iran's military, alleging that Tehran was using illicit crude revenue to rebuild its armed forces.Treasury said the activity posed "continued threats" to the US and its regional partners."Iran's military generates revenue through Iranian crude oil sales via an array of front companies to help fund its reconstitution and threaten its neighbors," according to the statement.Treasury Secretary Scott Bessent said the department would continue increasing pressure on Iranian crude revenue streams."The Treasury Department will continue to increase pressure on Iranian oil sales to deprive the Iranian regime and its military of the financial resources it needs to threaten US allies and partners in the Middle East," Bessent said.He added that the US would not allow Iran "to increase its oil revenue for the purpose of reconstituting its armed forces and military capabilities."Thursday's action was taken under Executive Order 13224, as amended, which targets terrorists and those providing support to terrorism.Treasury's sanctions campaign targeting Iranian oil sales is part of the broader Economic Fury campaign and the National Security Presidential Memorandum 2, which reinstated economic pressure on Iran.Separately, the US State Department's Rewards for Justice program said it would offer up to $15 million for information leading to the disruption of the financial mechanisms of Iran's Islamic Revolutionary Guard Corps and its affiliated branches.In a separate action, the Treasury Department's Office of Foreign Assets Control extended a general license authorizing certain transactions involving Russia's Lukoil International and related entities through June 27, 2026, according to a notice published Thursday.The updated General License 131F permits activities related to the negotiation of contingent contracts for the potential sale or transfer of the company and its subsidiaries, as well as transactions ordinarily incident and necessary to the maintenance or wind-down of operations.