FINWIRES · TerminalLIVE
FINWIRES

US Oil Update: Futures Mixed as Traders Weigh Iran Retaliation Risks

By

Crude oil prices traded mixed in after-hours trading on Tuesday after Iran vowed retaliation for fresh US strikes on its territory, keeping investors on edge over supply disruptions via the Strait of Hormuz even as diplomatic efforts to ease tensions continue.

Front-month West Texas Intermediate crude futures slipped 3.14% to $93.57 per barrel, while Brent futures jumped 3.29% to $99.30/bbl.

Liquidity Energy strategists said volatility is expected to remain elevated as traders monitor military developments, shipping flows, and diplomatic negotiations across the region.

On Tuesday, Iran's Islamic Revolutionary Guard vowed to retaliate against "violations of the ceasefire" after it identified and engaged US drones and an F-35 jet fighter that entered the country's airspace.

US forces "conducted self-defense strikes in southern Iran" on Tuesday, targeting vessels allegedly trying to deploy mines, as well as missile launch locations. The US Central Command said the actions were intended "to protect our troops from threats posed by Iranian forces."

Saxo Bank strategists said crude prices rebounded after renewed US military activity in southern Iran and the Strait of Hormuz partially reversed Monday's sharp decline.

Iran's Foreign Ministry condemned the US attacks as a violation of a ceasefire that's been in place since early April, while Supreme Leader Mojtaba Khamenei said that the "nations and lands of the region will no longer be a shield for American bases."

"Without any doubt, the Islamic Republic of Iran will leave no act of aggression unanswered and will show not the slightest hesitation in defending the sovereignty and territorial integrity of Iran," the Foreign Ministry said in a statement.

On the supply front, the Hormuz, the strategic waterway through which 20% of the world's oil and liquefied natural gas flows during peacetime, remains effectively closed amid a double blockade by the US and Iran.

The US military has redirected 108 Iran-linked commercial vessels and disabled four others since imposing the blockade on April 13, US Centcom said on Tuesday.

Iran's Islamic Revolution Guards said on Tuesday that 25 commercial vessels, including oil tankers and container ships, safely transited the Hormuz over the past 24 hours.

Related Articles

Oil & Energy

Update: Market Chatter: US Navy Supports Tanker Movements Through Strait of Hormuz

(Updated to include the US Central Command's response in the 7th and 8th paragraphs.)The US Navy quietly assisted vessels crossing the Strait of Hormuz, including a supertanker carrying 2 million barrels of crude, The Wall Street Journal reported Tuesday, citing US military officials.The officials said the Navy guided a Greek supertanker through waters near Oman after the vessel remained stranded in the Gulf since early March.The tanker is now sailing toward India to deliver its crude cargo, according to the report.Iranian attacks on vessels and Saudi restrictions on US base and airspace access forced the US to halt "Project Freedom," which it launched earlier this month to support traffic through the Strait of Hormuz.US officials said the Navy plans to assist about 12 vessels, including supertankers and container ships, through the waterway over the coming days, according to the report.A US Central Command spokesman reportedly told the WSJ that the military was not restarting Project Freedom and described reports of the initiative's resumption as inaccurate.US Centcom responded to' request for comment, dismissing all media reports that the US Navy had restarted escorting or assisting commercial vessels during transits through the Strait of Hormuz."Project Freedom has not resumed, and US forces are not currently escorting commercial vessels through the Strait of Hormuz," Centcom said in a post on X.(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

Oil Seen Swinging on US-Iran Deal Hopes, Structural Tightness Persists, Macquarie Says

Global oil markets could face a sharp, short-lived sell-off followed by a gradual rebalancing if a US-Iran agreement materializes, Macquarie strategists said in a note on Tuesday, adding that logistical constraints and stock dynamics may hamper a clean resolution of recent supply shocks.Though details of the possible deal remain limited, Macquarie analysts said reports suggest a 60-day extension of the ceasefire, reciprocal measures to reopen the Strait of Hormuz, and subsequent negotiations over nuclear issues.While markets have begun to price in easing geopolitical risk, analysts said past episodes suggest investors may discount political announcements in the absence of formal Iranian confirmation.Macquarie, in a base-case scenario, sees oil falling to about $20 per barrel within a week if markets accept the deal as credible, followed by a two-week consolidation phase.The bank said a subsequent repricing, driven by logistical and financial constraints, could emerge as vessel flows and storage dynamics adjust.However, Macquarie expects this would ultimately lead to an overshoot on the downside as supply returns faster than demand rebalances, before prices stabilize within a fair-value range of $65/bbl to 70/bbl.Macquarie, in its more cautious scenario, assumes a slower grind lower, with a $10 decline rather than $20, as incremental positive headlines accumulate without a fully signed agreement. The analysts said in that case, markets could retain a $5-$10 geopolitical premium until a clearer resolution.The bank said the key transmission mechanism for any de-escalation would be physical flows rather than headlines.It estimates that clearing Gulf shipping backlogs and normalizing tanker routes could take two to four weeks, followed by another two to four weeks for flows to approach full capacity, contingent on trust in safe passage through the Strait.Restarting energy infrastructure across the Arabian Gulf would mark key milestones, with Saudi Arabia expected to restore output quickly, while scrutiny is likely to focus on recovery timelines in Kuwait and Iraq.Logistically complex assets, including LNG and refining operations, could provide key signals of normalization.However, despite disruption risks, Macquarie said there is a significant buffer in global oil inventories and floating storage, which has helped cushion markets during recent supply shocks.The bank forecasts that 150-200 million barrels of crude are currently floating in the Arab Gulf, alongside about 6.5 million barrels of refined products. Of this, about 30% is Saudi-origin and 25% Iranian, with around 60 very large crude carriers and 40 Aframax-class vessels involved.Floating crude stocks in Asia are estimated at 50 million barrels, with a high share of sanctioned vessels, while China has seen a 2.8 million-barrel-per-day reduction in refining runs, partly linked to the conflict. Japan is reported to retain comfortable strategic stockpiles exceeding 90 days of cover.Macquarie said global oil balances remain supported by a combination of pre-existing surplus, strategic petroleum reserve releases, pipeline flexibility, and demand destruction. While Strategic Petroleum Reserve support is expected to continue into July and August, the bank said flows are likely to taper from June.Shock absorbers remain available for at least three months and potentially into the autumn, Macquarie said, adding that these buffers could prevent immediate upside price spikes but also set the stage for delayed volatility once inventories normalize.

Oil & Energy

China Crude Import Slump Eases Asian Refinery Feedstock Tightness, Kpler Says

China's sharp pullback in crude imports is unexpectedly loosening regional supply constraints, allowing refiners across Asia to secure additional barrels and lift throughput despite the near-closure of the Strait of Hormuz, Kpler strategists said in a note on Tuesday.Chinese crude imports month-to-date in May are tracking at about 6.6 million barrels per day, "the lowest level since 2016,' said Sumit Ritolia, modeling refinery and oil markets at Kpler.The decline has reduced China's demand for cargoes from key suppliers, including Russia, Africa and the Americas, effectively freeing up volumes for other Asian buyers at a time when Middle Eastern flows remain constrained.The shift has helped refiners in South Korea, Japan, Southeast Asia and India secure more flexible supply than initially expected, partially offsetting tighter Gulf barrels and preventing a deeper regional processing crunch.Kpler said Asia ex-China refinery runs are now estimated at around 14.8 million b/d in May, up roughly 900,000 b/d from April, though still about 1.3 million b/d below year-ago levels.The consultancy said a similar range of 14.8-15 million b/d is expected to persist into June, suggesting a gradual but limited recovery in regional throughput.The shift in crude flows has been most pronounced in seaborne imports from the Atlantic Basin.Ritolia said Asia ex-China imports of US crude are tracking near a record 1.94 million b/d in May, as refiners diversify supply sources.African crude imports have also climbed to about 1.7 million b/d, also near historic highs.South Korea has seen one of the largest monthly increases in demand, with crude imports rising to about 2.6 million b/d in May, up about 1 million b/d from April, though still around 450,000 b/d below a year earlier.Gains have been driven largely by stronger US and African flows. Singapore and Thailand have also recorded higher arrivals during the month.India's imports have remained resilient, tracking near 5 million b/d in May, up from an average of about 4.8 million b/d in 2025, potentially marking a record May intake. The increase has been supported primarily by Russian and Venezuelan crude flows.However, despite improved availability, Kpler said Asian refining activity remains heavily disrupted.Cumulative crude processing losses across the region are estimated at about 2.7 million b/d between March and May, including gasoil losses of 940,000 b/d, gasoline losses of 700,000 b/d and kerosene losses of 300,000 b/d.Though some refiners have partially offset disruptions by increasing imports from the US, Africa, and other Atlantic Basin suppliers, regional runs remain well below seasonal norms.Going forward, Kpler analysts said Chinese crude import trends will remain a key driver of Asian balances, as a sustained period of weaker Chinese demand is expected to continue supporting feedstock availability for regional refiners.