-- 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."