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US Oil Update: Futures Settle Lower After US-Iran Talks Report, Red Sea Flows Hold

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Crude oil futures fell in after-hours trading on Friday, pulling back from multi-month highs above $100 per barrel, as markets weighed signs that oil was still managing to transit the Red Sea despite the recent escalation in hostilities.

Front-month West Texas Intermediate crude futures tumbled almost 1.7% to $90.47 per barrel, while Brent futures slipped by almost 2% to $98.7/bbl.

Pakistan is reportedly exploring a resumption of stalled US-Iran negotiations to end their nearly five-month-old conflict, following a diplomatic push by China, Tehran's largest trading partner.

Though Iranian officials have maintained public defiance, Iran's Interior Minister Eskandar Momeni traveled to Islamabad this week for exploratory talks, marking his second visit in ten days.

Momeni, considered an ally of the Islamic Revolutionary Guard Corps, met with Pakistani leaders and defense chief Asim Munir during the trip.

On Friday, President Trump reportedly said he will soon make a decision on whether to launch a "massive attack" on Iran as the Middle East conflict has widened a new battleground in the Red Sea.

"We're talking to them right now. I think they're getting more and more serious as the days go by...I consider that the smarter way, but the other's probably the easier way, doing what we're doing - and we can take that to a much higher level if we want to," Trump told reporters at the White House.

The US Central Command said it had completed a 13th consecutive night of attacks on Iran, targeting Iranian military command centers, drone storage facilities, communication networks, and coastal surveillance sites to further diminish the threat Tehran poses to vessels transiting the Hormuz.

US Centcom said that over 50,000 US service members are operating across the Middle East.

Iran, in response, said it attacked US military equipment depots at Al-Adiri, known as Camp Buehring, in northern Kuwait, and the positions of US troops at Camp Arifjan and at Camp Doha, near Kuwait City.

Tehran's also said they had significantly damaged a surveillance tower used by the US Fifth Fleet in Bahrain. On Friday, the IRGC warned the populations of Gulf countries of potential strikes against US military personnel who may be using "buildings in cities as locations to direct their crimes."

Kim said Trump warned of a potentially larger US military response against Iran, while Iran threatened retaliation against regional energy infrastructure if attacks escalate further.

On the supply front, the security situation in the Hormuz has deteriorated over the past weeks, with the latest shipping data showing only six confirmed crossings on July 23, down 60% day-over-day.

Kpler said that five of the six vessels followed the Iranian Unilateral Scheme, highlighting the continued concentration of traffic along that route. Traffic through the Bab el Mandeb Strait increased, with 49 confirmed crossings recorded on July 23.

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Crude futures settled higher in after-hours trading on Thursday as escalating Middle East hostilities and threats to commercial shipping by Yemen's Houthis heightened global supply fears.Front-month West Texas Intermediate crude futures rallied 6.4% to $92.536 per barrel, while Brent futures soared by 6.9% to $100.65/bbl.US commercial crude oil inventories increased by 2 million barrels to 411.7 mmbbls in the week ended July 17, the Energy Information Administration said in its weekly report on Wednesday.Crude inventories are now about 6% below the five-year average for this time of year, the EIA saidGelber & Associates said that the narrative of low US crude inventories is adding support, leaving prices highly sensitive to further military action or signs of de-escalation.On Thursday, President Trump said that the US will punish Iran for any ship attacks by the Houthis, after the group targeted two Saudi Arabian vessels in the Red Sea, extending the Middle East conflict to a second major shipping chokepoint."If they do this again, the US will hold Iran responsible, in that the Houthis are a surrogate and/or proxy of Iran, and major military punishment will be inflicted upon Iran and, of course, the Houthis themselves," Trump said in a social media post on Truth Social.The US President's remarks followed Houthis' attack on two Saudi Arabian oil tankers, the Encelia and the Layla, in the Red Sea. The attack triggered a fire on the Encelia, while several other tankers altered course or suspended transits through the vital Bab el-Mandeb Strait.The US Central Command also completed its 12th consecutive night of attacks on Iranian targets on Wednesday, hours after Trump said the US would destroy an Iranian bridge or power plant each time Iran attacks a ship in the Strait of Hormuz.US forces struck Iranian military targets including maritime capabilities, missile and drone storage facilities, coastal surveillance sites, and air defense assets, Centcom said in a post on X, adding that over 50,000 US service members are operating across the Middle East.Iran, in response, said it attacked US missile systems, weapons and fuel storage sites in Jordan, as well as US military posts in Kuwait.Meanwhile, Iran's Islamic Revolutionary Guards Corps said an oil tanker caught fire after an explosion while attempting to follow a mined route in the southern area of the Hormuz near the coast of Oman and that two others had turned back.Kpler strategists said that with pressure building on both major export corridors, market attention is shifting from concerns over excess supply to the growing risk of prompt crude tightness.Saxo Bank strategists said that the US-Iran conflict escalated further, with Centcom launching fresh strikes on Iranian military targets on Wednesday night and both sides playing down the prospect of near-term talks.

Oil & Energy

Brent Supported by Gulf Supply Disruptions, Tight Fuel Markets, Macquarie Says

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Oil & Energy

Hormuz Ship Transits Rise, But Crude Tanker Flows Remain Well Below Pre-Crisis Levels

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