FINWIRES · TerminalLIVE
FINWIRES

US Oil Update: Crude Steadies as US-Iran Clashes, UAE Strikes Jolt Ceasefire Hopes

By

Crude futures were little changed in after-hours trading on Friday as a series of military exchanges between the US and Iran and Iranian missile attacks on the UAE threatened to collapse a fragile month-long ceasefire and reignited concerns over global supply security.

Front-month West Texas Intermediate crude futures were down 0.14% to $94.68 per barrel, while Brent futures were up 0.28% to $100.34/bbl.

A US intelligence analysis reportedly concluded that Iran could withstand a naval blockade for months, suggesting that Tehran would not face severe economic pressure from a blockade of Iranian ports for about another four months.

The US expects an Iranian response to its latest proposal to end the conflict by the end of the day on Friday.

President Trump reportedly insisted the ceasefire with Iran remained in effect despite the clashes in the Hormuz, calling the exchange of fire "just a love tap." US Secretary of State Marco Rubio also told reporters in Rome that Washington is expecting "something today."

"We still believe that, given a live-fire exchange in the world's most important oil choke point, the current price action is surprisingly muted," Ole R. Hvalbye, commodities analyst at SEB Research, said in a note Friday.

The US and Iranian naval forces exchanged fire in the Strait of Hormuz on Thursday, with each side claiming the other initiated the attack.

Iran has largely blocked non-Iranian shipping via the Hormuz since the outbreak of the Middle East conflict on Feb. 28. The US imposed a blockade on Iranian vessels last month.

On Friday, US naval forces fired on and disabled two Iranian oil tankers, M/T Sea Star III and M/T Sevda, that violated Washington's blockade of Iranian ports.

"US Central Command enforced blockade measures against two Iranian-flagged unladen oil tankers attempting to pull into an Iranian port on the Gulf of Oman," CENTCOM said in a statement on X.

Iranian authorities, meanwhile, said the Iranian Navy had seized an oil tanker, Ocean Koi, in the Gulf of Oman over what Tehran described as maritime violations and attempts to disrupt Iranian oil exports.

"The tanker had sought to exploit the ongoing situation in the region in a bid to damage and disrupt the export of oil and the interests of the Iranian nation," according to an Iranian Navy statement carried by local media.

The developments have cast more doubt on a fragile US-Iran ceasefire that President Trump insisted is still in effect, as Washington awaits the Iranian response to its latest proposal for a deal to end the conflict.

"The Strait of Hormuz remains effectively closed, with renewed clashes between US and Iranian forces lowering the prospect of a near-term reopening," Saxo Bank strategists said, adding that the International Energy Agency estimates regional supply losses at about 14 million barrels per day.

Speaking at a policy conference in Toronto, Canada, Fatih Birol, the IEA's executive director, said on Thursday that the agency was prepared to take further action after members agreed in March to release 400 million barrels of crude.

Related Articles

Oil & Energy

US Oil Update: Futures Climb After Iran Fired Missiles at US Navy Vessels Near Hormuz

Crude oil futures advanced in after-hours trading on Thursday on reports that Iran fired missiles at US Navy vessels near the Strait of Hormuz, heightening fears of a wider conflict in the Middle East and potential disruptions to crude supplies.Front-month West Texas Intermediate crude futures gained 2.71% to $97.66 per barrel, while Brent was up 2.10% to $103.64/bbl.On Thursday, Iran's military fired missiles at "enemy units" following what an Iranian official described as a US attack on an Iranian tanker in the Hormuz, according to local media.A senior Iranian military official was quoted as saying that following the unprovoked attack by US military aircraft on an Iranian oil tanker in the Gulf of Oman, enemy units operating in the Strait came under Iranian missile fire.The fire exchange comes as Iran is reportedly set to deliver a response to the US's one-page memorandum of understanding in the next two days, after Tehran said it was reviewing Washington's peace proposal to end the Middle East conflict.The attacks also follow reports saying Saudi Arabia and Kuwait lifted restrictions on the US's use of its airspace and military bases, paving the way for Washington to restart operations to escort commercial ships via the Hormuz as early as this week.Meanwhile, President Trump said the US would lift its blockade "assuming Iran agrees to give what has been agreed to, which is, perhaps, a big assumption," adding that "if they don't agree, the bombing starts."Amena Bakr, head of Middle East Energy at Kpler, said the oil industry has been built around navigating challenges over the decades, and a good indicator of a real deal is when you see energy companies confident it's real and start making decisions on that basis. "We are far from seeing that yet," Bakr said.On the supply side, US crude and fuel inventories continued to draw down last week, with the latest data from the Energy Information Administration showing that crude oil inventories decreased by 2.3 million barrels to 457.2 mmbbls.Crude oil input to refineries dropped by 42,000 barrels per day from the previous week to average about 16 mmb/d in the week ending May 1, the EIA said, adding that crude oil production dropped by 13,000 b/d to 13.6 mmb/d.EIA data showed US commercial crude inventories fell by 2.3 million barrels last week, smaller than the 8.1-million-barrel draw reported by the API and slightly below market expectations of a 2.4 million-barrel decline, ING strategists said in a note on Thursday.The Treasury Department sanctioned Iraq's deputy oil minister on Thursday, alleging his involvement in a scheme to help Iran sell its oil in violation of an international embargo by blending it with Iraqi crude."The Iranian regime is pillaging resources that rightfully belong to the Iraqi people," said Secretary of the Treasury Scott Bessent. "Treasury will not stand idly by as Iran's military exploits Iraqi oil to fund terrorism against the US and our partners."

Oil & Energy

Market Chatter: Gulf States Restore US Access for Strait of Hormuz Escort Mission

Saudi Arabia and Kuwait restored US military access to bases and airspace Thursday, clearing the way for Washington to revive its Strait of Hormuz escort mission, the Wall Street Journal reported, citing US and Saudi officials.Pentagon officials are reportedly preparing to restart the maritime security mission as early as this week after suspending operations earlier this week.US forces designed the operation around warships, fighter aircraft and surveillance systems to shield commercial vessels from Iranian missile and drone attacks across the critical shipping route.The operation sparked one of the biggest strains in Saudi-US military ties in years as repeated calls between President Donald Trump and Crown Prince Mohammed bin Salman raised concerns over Washington's long-standing security partnership with Riyadh.Saudi Arabia and Kuwait blocked US military access to bases and airspace after US officials downplayed Iranian attacks in the Persian Gulf, while Gulf states worried Washington would not protect them if fighting escalated further, according to the officials.Trump paused Project Freedom on Tuesday after Saudi crown prince raised concerns and informed him that Saudi Arabia would restrict US access to military bases and airspace, the officials reportedly said.Trump tried to persuade the Saudi crown prince to reverse the restrictions, the report added, citing officials.Trump posted on Truth Social on Tuesday, "Based on the request of Pakistan and other countries... while the Blockade will remain in full force and effect, Project Freedom (the movement of ships through the Strait of Hormuz) will be paused for a short period of time to see whether or not the Agreement can be finalized and signed.Responding to' query on restarting Project Freedom, the White House cited an official saying, "There was never a restriction or a ban to begin with, that is fake news."Meanwhile, another phone call between President Trump and Saudi crown prince led Saudi Arabia to restore US military access to bases and airspace, according to US and Saudi officials.US defense officials said naval escorts would steer commercial vessels through a narrow corridor cleared of mines while destroyers, drones, helicopters and fighter jets secured the route.Defense Secretary Pete Hegseth said Tuesday that US destroyers, fighter jets, helicopters, drones and surveillance aircraft were providing round-the-clock protection for commercial vessels in the Strait of Hormuz.Iran answered the US operation with missile and drone attacks targeting the UAE, including strikes on Fujairah's oil-export facilities and threats against commercial vessels, the report said.Gulf states became increasingly concerned that the US would not respond forcefully to further Iranian attacks and feared Tehran could conclude it can strike regional countries without facing serious consequences.US forces intercepted several attacks and destroyed six Iranian fast-attack boats, although Tehran still struck non-US ships and launched 15 missiles along with multiple drones toward the UAE.Kuwait's Ministry of Foreign Affairs and Saudi Arabia's Ministry of Foreign Affairs didn't 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.)

Oil & Energy

US Oil Update: Crude Steadies on US-Iran Peace Deal Hopes, Inventory Draw

Crude oil futures were little changed in midday trading on Thursday as optimism for a US-Iran peace deal to end the Middle East conflict gained momentum, with a larger-than-expected drop in US crude inventories lending further price support.Front-month West Texas Intermediate crude futures eased by 0.05% to $95.22 per barrel, while Brent futures were down 0.55% to $100.64/bbl."EIA data showed US commercial crude inventories fell by 2.3 million barrels last week, smaller than the 8.1 million-barrel draw reported by the API and slightly below market expectations of a 2.4 million-barrel decline," ING strategists said in a note on Thursday.US crude and fuel inventories continued to draw down last week, with the latest data from the Energy Information Administration showing that crude oil inventories decreased by 2.3 million barrels to 457.2 mmbbls.Crude oil input to refineries dropped by 42,000 barrels per day from the previous week to average about 16 mmb/d in the week ending May 1, the EIA said, adding that crude oil production dropped by 13,000 b/d to 13.6 mmb/d.Iran is reportedly set to deliver a response to the US's one-page memorandum of understanding through Pakistan, the mediator in the US-Iran talks, in the next two days. However, Iran hasn't indicated whether it will accept the terms.Rystad Energy strategists said Iran's Revolutionary Guard has remained silent on the US proposal, a departure from past episodes in which it responded to US initiatives.The analysts said the lack of comment could signal that the proposal is being considered seriously at senior levels in Tehran.The memorandum of understanding would reportedly allow for the gradual reopening of the Strait of Hormuz and the lifting of the US's blockade on Iranian ports.On Wednesday, Trump said the US would lift its blockade "assuming Iran agrees to give what has been agreed to, which is, perhaps, a big assumption," adding that "if they don't agree, the bombing starts."Amena Bakr, head of Middle East Energy at Kpler, said the oil industry has been built around navigating challenges over the decades, and a good indicator of a real deal is when you see energy companies confident it's real and start making decisions on that basis. "We are far from seeing that yet," Bakr said.Elsewhere, the US Treasury Department sanctioned Iraq's deputy oil minister on Thursday, accusing him of involvement in a scheme to help Iran sell its oil in violation of an international embargo by blending it with Iraqi crude.Deputy Minister of Oil Ali Maarij Al-Bahadly authorized trucking several million dollars' worth of Iraqi oil a day to a smuggler who combined it with Iranian crude, Treasury said. Maarij helped falsify documents, enabling the blended product to be smuggled to market disguised as purely Iraqi oil.