FINWIRES · TerminalLIVE
FINWIRES

US Oil Update: Crude Settles Lower as Markets Weigh Iran Peace Talks Progress

By

Crude oil futures fell in after-hours trading on Thursday as markets weighed the prospects for an end to the Middle East conflict that could reopen the Strait of Hormuz, following reports about a ceasefire deal between Israel and Lebanon.

Front-month West Texas Intermediate crude futures tumbled by 3.06% to $93.12 per barrel, while Brent futures were down 2.59% to $95.28/bbl.

The ceasefire between Israel and Lebanon announced on Wednesday could meet one of Tehran's key bargaining conditions, easing the way to a pact between the US and Iran.

ING strategists said that inventories are likely to continue to tighten into Q3, leaving upside risks to prices.

US crude oil inventories 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. Crude inventories are now about 3% below the five-year average for this time of year, the EIA said.

The decline exceeds Macquarie's forecast of a 6.2-mmbbl draw for the week ending May 29.

Iran has indicated that any wider agreement with the US would partly depend on an end to hostilities between Israel and the Iran-backed Hezbollah movement. Israel and Lebanon's agreement to implement a ceasefire on Wednesday would satisfy one of Iran's key conditions, potentially easing the path toward a broader understanding between Tehran and Washington.

However, Hezbollah rejected a new ceasefire in Lebanon on Thursday, and Israel said it would not withdraw its troops from the country.

Derek Halpenny, head of research at MUFG, said if the ceasefire between Israel and Hezbollah can hold over the coming days, it increases the prospect of some progress between the US and Iran.

On Thursday, Iran's Islamic Revolutionary Guard reportedly said peace in the region would not be possible unless Israel withdrew from the occupied areas in Lebanon.

The IRGC said in a statement that its main condition for accepting a ceasefire in the region is a ceasefire on all fronts, including Lebanon.

Meanwhile, the Strait of Hormuz remains the oil market's central focus, with supply disruptions and ongoing closures pushing energy prices to record highs.

Saxo Bank strategists said traffic through the Hormuz, a key chokepoint that normally handles about one-fifth of global oil and LNG shipments, has recovered modestly but remains well below pre-conflict levels.

The US Central Command said on Thursday that US forces redirected 127 Iran-linked commercial vessels.

Related Articles

Oil & Energy

US Oil Update: Crude Jumps After Large Inventory Draw, US-Iran Clashes

Crude oil futures settled higher in after-hours trading on Wednesday after US-Iran clashes stoked fears of supply disruptions in the Middle East, while a sharp draw in US crude stockpiles signaled tightening fundamentals.Front-month West Texas Intermediate crude futures climbed 2.60% to $96.20 per barrel, while Brent futures advanced 1.20% to $96.97/bbl.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.The agency said that inventories are now about 3% below the five-year average for this time of year.Soojin Kim, research analyst at MUFG, said crude prices rose for a third consecutive session as growing doubts over a US-Iran peace agreement and renewed regional tensions heightened concerns about prolonged supply disruptions.Iran said on Wednesday that communication with the US has not been severed and that messages have been exchanged over the need to halt Israeli "aggression" against Lebanon, but no tangible progress has been made in talks, according to local media.Foreign Minister Seyed Abbas Araghchi said that in the event Israel continues its strikes on Beirut, Iran's armed forces are "fully prepared" to resume hostilities and attack targets inside Israel.On Tuesday, President Trump and Secretary of State Marco Rubio said that peace negotiations to end the Middle East conflict were ongoing, pushing back against Iranian media reports suggesting communications had broken down.ING strategists said Trump said he remains optimistic about securing an interim agreement with Iran, but conflicting reports on the status of negotiations have added uncertainty to the market.Meanwhile, the US and Iran traded military strikes again earlier on Wednesday as the three-month conflict is currently at an impasse, as the two sides have failed to progress their ceasefire into a more permanent peace deal.Iran 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.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."Markets remain focused on the future of energy flows through the Strait of Hormuz, with delays in reaching a deal raising the likelihood that global inventories will need to be drawn down further before Gulf exports fully recover," Kim said.

Oil & Energy

Aramco Selects McDermott for Long-Term Project Management Consultancy Agreement

Aramco selected McDermott as one of 11 contractors under a multi-year project management consultancy agreement supporting major energy and industrial developments across Saudi Arabia, McDermott said Wednesday.Through the agreement, McDermott will provide engineering, front-end development and project management consultancy services for large-scale energy, downstream, petrochemical and low-carbon projects in Saudi Arabia, the company said.To deliver the work, McDermott formed a strategic partnership with Solutions Leaders Fayez Engineering, or SLFE, an Aramco-approved engineering services contractor based in Saudi Arabia, the company said.The partnership combines McDermott's experience managing large capital projects with SLFE's local engineering expertise and in-country execution capabilities, according to the company.Michael McKelvy, chief executive officer and chair of McDermott, said the company's partnership with SLFE will support localization, knowledge transfer and long-term capacity building in Saudi Arabia.Under the arrangement, SLFE will handle engineering support and client engagement within Saudi Arabia, while McDermott will oversee execution planning, governance and technical leadership through its global engineering network, the company said."We are proud to partner with McDermott on this strategic agreement with Aramco," Ashraf Alkhaznadar, president and chief executive officer of SLFE, said, adding that the collaboration supports Aramco's long-term objectives while helping develop domestic engineering capabilities.The award strengthens McDermott's position within Aramco's long-term investment program and expands its role as a provider of engineering and project execution services, according to the company.

Oil & Energy

Libya Pushes Ahead With Refinery Restart as Energy Sector Gains Momentum, Kpler Says

Libya's plan to restart the 220,000-barrel-per-day Ras Lanuf refinery could curb fuel imports and reduce crude shipments to Europe, Kpler said in a note on Wednesday.After reaching an agreement with its Emirati partner in mid-May, Libya's National Oil, also known as NOC, took full ownership of Ras Lanuf, ending a years-long dispute and clearing the way for refurbishment work, Kpler said.Kpler expects Libya's oil production to hold near 1.35 million b/d to 1.4 million b/d through 2027, although the firm believes the refinery is more likely to return during the second half of 2027 than within the timeline suggested by the NOC.Libya's energy sector gained momentum this year as TotalEnergies (TTE) and ConocoPhillips (COP) extended the Waha Oil concession through 2050 in January, followed by the country's first licensing round in 17 years in February, Kpler said.Repsol-led groups, MOL, the Eni-QatarEnergy partnership, Chevron (CVX) and Aiteo secured the licenses, while joint projects with Eni (E), Repsol and Sonatrach resulted in three new hydrocarbon discoveries in April, Kpler said.Libya currently refines about 100,000 b/d, with Zawiya accounting for most of that volume, while Marsa El Brega processes about 9,000 b/d, Sarir handles 10,000 b/d and Tobruk contributes roughly 20,000 b/d, Kpler estimates.Libya consumes as much as 250,000 b/d of transport fuels, including 90,000 b/d to 100,000 b/d of gasoline and 140,000 b/d to 150,000 b/d of diesel, Kpler data show.To meet that demand, Libya imports over 150,000 b/d of refined products, sourcing gasoline mainly from Italy, the Netherlands, Belgium and Spain, while diesel supplies largely come from Italy and Turkey.If Ras Lanuf resumes operations, Libya could replace a large share of those imports with domestic production.The refinery would use Amna, Sarir and Mesla crude grades, which currently account for 270,000 b/d to 300,000 b/d of exports, potentially forcing buyers in Italy and the UK to find alternative supplies, Kpler said.Price: $89.62, Change: $+0.22, Percent Change: +0.25%

$COP$CVX$E$TTE