FINWIRES · TerminalLIVE
FINWIRES

US Oil Update: Crude Slips Following Reports of Tankers Crossing Hormuz

By

Global oil prices retreated on Thursday following reports that Iran has begun allowing limited maritime traffic through the Strait of Hormuz.

Front-month West Texas Intermediate crude futures dropped by 0.4% to $100.58 per barrel, while Brent futures fell by 0.6% to $104.96/bbl.

According to Iranian state media, about 30 vessels have crossed the strategic chokepoint since Wednesday evening with Tehran's permission.

The Fars news agency further noted that authorities have specifically begun allowing transit for certain Chinese-affiliated vessels, signaling a tactical shift in Iran's blockade strategy.

The sudden, if limited, easing of maritime restrictions coincides with the high-stakes summit between President Trump and President Xi Jinping in Beijing.

Market participants are closely watching the talks, with some analysts at ING suggesting that traders may be overly optimistic that China, Iran's primary oil buyer can broker a deal to end the war.

President Trump has downplayed the likelihood of a diplomatic breakthrough regarding the energy crisis, stating that Washington has the situation "under control".

Despite the slight cooling of prices, fundamental data shows markets remain tightly supplied.

The International Energy Agency has aggressively revised its 2026 outlook, now predicting a demand contraction of 420,000 b/d, while OPEC reported that its April production plummeted by 1.73 mb/d to 18.98 million b/d.

This output drop, during the final month of the UAE's membership in the group, underscores the severe impact of the 10-week blockade.

Related Articles

Oil & Energy

Atlantic Gasoline Markets Tighten as Eastbound Trade Reverses, Vortexa Says

Global gasoline markets are tightening ahead of the peak US summer driving season as Atlantic Basin fuel flows reverse, inventories shrink and refinery constraints deepen supply concerns, Vortexa analyst Mick Strautmann said in a Wednesday note.After roughly six weeks of gasoline and blending components moving eastward from the Atlantic Basin into Asia, the arbitrage has flipped, prompting western markets to retain more supply.The shift comes as gasoline refining margins on both sides of the Atlantic climb to multi-year highs and US retail fuel prices reach levels last seen in 2022, Vorterxa said, citing Energy Information Administration data.Atlantic Basin exports to the Pacific Basin hit consecutive 10-year highs in March and April as Asian refinery run cuts, driven by reduced Middle Eastern crude availability following disruptions around the Strait of Hormuz and export restrictions from China and South Korea, pulled barrels from Europe, the US Gulf Coast and Nigeria.That eastbound trade eased in early April as crude supplies into Asia diversified and the arbitrage closed. Attention has since turned back to the Atlantic Basin, where inventories remain tight.Northwest Europe gasoline and blending component exports to the US East Coast have begun their typical seasonal increase, but second-quarter volumes remain more than 30% below year-earlier levels and near the bottom of historical seasonal ranges."ARA inventories sit materially below year-ago levels... drawn down by high export levels since the start of Hormuz disruptions," the analysis said, citing data from Insights Global via Argus.While European suppliers remain capable of serving both Atlantic and Pacific markets, competition for barrels is lifting prices.In the US, refiners face an additional constraint: shortages of high-octane blending components such as alkylates.US refineries are operating at elevated utilization rates ahead of summer, with Gulf Coast plants running near maximum capacity.Still, the steepest RBOB gasoline backwardation since the post-pandemic transport recovery, which is discouraging inventory builds and is likely to keep prices elevated through the driving season, even if Hormuz-related disruptions ease.Despite measures including a national Reid Vapor Pressure waiver of gasoline by the Environmental Protection Agency and discussions of a federal gasoline tax suspension, Strautmann said the Atlantic Basin is entering summer with its tightest gasoline balance in years.

Oil & Energy

Europe's Jet Fuel Market Swings To Acute Shortfall Amid Supply Disruptions, Rystad Says

Europe's jet fuel market has shifted from structurally tight to acutely short after major supply disruptions cut flows by about one million barrels per day, Rystad Energy strategists said in a note on Thursday.Rystad said that the closure of the Strait of Hormuz has removed about 500,000 b/d of Middle East refinery exports, while Asian refinery run cuts have reduced supply by a further 500,000 b/d.The combined loss equals over 10% of the projected 2026 global jet demand of 8 million b/d.Jet fuel prices in Europe are now more than double their 2025 averages, outpacing a rise of over 70% in Brent crude, while Amsterdam-Rotterdam-Antwerp hub stocks have fallen to 579,000 metric tons, their lowest level in six years, leaving about six weeks of cover.European inventories are set to breach the critical 23-day cover threshold by June under current trends, Rystad said."Europe is not facing a tight market. It is facing a structural supply hole," said Susan Bell, senior vice president, Commodities, Oil at Rystad Energy.Bell said that record US Gulf Coast exports of 110,000 b/d to Europe, alongside cargoes from West Africa, including Nigeria's Dangote refinery, are helping offset losses but cover only about half the deficit."A ceasefire would move futures fast, but physical jet markets will not normalize until at least 60 days after the strait reopens," she said.Europe imports more than 30% of its jet fuel, with the Middle East typically supplying about 65% of those imports and Asia a further 22%. Both regions are now constrained.Rystad said April inflows from the US Gulf Coast hit a record 110,000 b/d, but combined Atlantic Basin flows cover just over half of the lost Middle East supply.Bell said even if replacement volumes improve to 75% of the deficit, stocks would still breach the 23-day threshold by August.Meanwhile, demand destruction is offering limited relief. European jet demand is running about 150,000 b/d below 2025 levels as airlines cut unprofitable routes, with prices around $4.50 per gallon.Lufthansa has canceled 20,000 flights, Spirit Airlines has ceased operations, and United Airlines has warned of potential ticket price increases of up to 20%.Rystad lowered its forecast for 2026 global jet demand growth to about 200,000 b/d year over year, down from 400,000 b/d previously. Growth could turn negative if the Strait remains closed beyond mid-June.The consultancy said if the strategic waterway reopened immediately, physical markets would need around 60 days to normalize.Of the 300,000 b/d of jet supply lost to refinery damage, Rystad analysts said about half could recover swiftly, while Asian throughputs would ramp within 30 to 60 days of crude resuming.

Oil & Energy

Market Chatter: OPEC+ Plans to Fully Restore Production Targets by September

Key members of the Organization of the Petroleum Exporting Countries and their allies aim to further increase production quotas in three monthly stages to fully restore the 2023 supply cutback of 1.65 million barrels per day by the end of September, Bloomberg reported Thursday, citing three delegates.After the last agreement to increase production targets by 188,000 b/d for June, the group has so far decided to restore about two-thirds of the halted output.The delegates told the news agency that the remaining layer will be revived despite shipping constraints in the Persian Gulf and Abu Dhabi's exit from the organization, which alone removes 144,000 b/d of the original supply cut.The effective closure of the Strait of Hormuz following the onset of the US-Iran war has restricted Middle Eastern producers' ability to export oil, thereby cutting their own crude production.OPEC leader Saudi Arabia has reduced its output to its lowest since 1990 at 6.3 mmb/d in April, while Kuwait, Iraq, and the UAE also reported production declines versus pre-war levels.While the planned supply increases may not materialize physically due to restrictions, OPEC+ reportedly continues to review its production policies. The alliance is set to meet on June 7 to discuss their plan for July.OPEC+ also continues to review its members' maximum production capacities to better calibrate quotas in 2027, according to the sources cited by the news agency. The assessment, conducted by Dallas-based consultant DeGolyer and MacNaughton, began in 2025.The organization did not immediately respond to' request for comment.(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.)