-- Crude oil futures diverged in after-hours trading on Thursday as heightened tensions between the US and Iran kept traders wary of potential supply disruptions, amid reports that President Trump may maintain his naval blockade against Iran for weeks.
Front-month West Texas Intermediate crude futures dropped by 1.38% to $105.41 per barrel, while Brent futures were up by 0.72% to $111.24/bbl.
"With supply tightening and geopolitical tensions rising, oil markets remain highly volatile and vulnerable to further upside shocks," said Soojin Kim, research analyst at MUFG.
Trump is reportedly reviewing new military options while maintaining a strict naval blockade on Iranian ports, amid reports that he will receive a briefing on US plans for a series of new military strikes on Iran.
Trump rejected Iran's proposal to reopen the Strait of Hormuz, signaling the naval blockade will remain in place until a broader nuclear agreement is reached, according to media reports.
"The oil market has moved from over-optimism to the reality of the supply disruption we are seeing in the Persian Gulf," ING strategists said, adding that the longer the disruption persists, the less the market can rely on inventory.
Iranian authorities, on the other hand, have vowed to respond with "long and painful strikes" on US positions if Washington renewed attacks, while reasserting control over the Hormuz.
"You have seen the fate of your bases in the region; you will also see the fate of your warships", IRGC Aerospace Force Commander Majid Mousavi was quoted as saying.
Iran's Supreme Leader, Mojtaba Khamenei, also said that Tehran would eliminate what he described as the enemy's abuse of the waterway under the new management of the Strait, as his country moves to assert its control over the key chokepoint.
The stalled peace talks between the US and Iran has the fate of the Strait in limbo, the strategic waterway that was nearly shut down by Tehran after the outbreak of the Middle East conflict in February and has endured added pressure from a US naval blockade of Iranian ports.
Data analytics firm Kpler said about 60 days into the disruption, oil flows through the key chokepoint remain close to minimal levels, falling from about 20 million barrels per day to about 1 million b/d in April.
Traffic through the Hormuz remains limited and uneven, with crossings continuing to show a sharp directional imbalance, according to Kpler. As of April 29, a total of 12 vessel crossings were recorded, up by four day-on-day, with all ships moving west-to-east and no return traffic observed.
On the supply front, OPEC+ is expected to agree on another symbolic production increase of 188,000 barrels per day for June, in the group's first move following the UAE's surprise departure.