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US Oil Update: Futures Settle Lower as Market Weighs Reports About Iran Peace Deal

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Crude oil futures settled lower in after-hours trading on Thursday as traders digested reports about a potential memorandum of understanding between the US and Iran to extend their ceasefire by 60 days.

Front-month West Texas Intermediate crude futures eased 0.17% to $88.53 per barrel, while Brent futures fell 1.13% to $93.22/bbl.

US crude oil stockpiles fell by 3.3 million barrels to 441.7 mmbbls in the week ended May 22, the Energy Information Administration said in its weekly report on Thursday.

Strategic Petroleum Reserve inventories dropped to 365.1 mmbbls for the week ended May 22, down from 374.2 mmbbls a week ago, marking a weekly decline of 9.1 mmbbls, EIA data showed.

Crude inventories are now about 2% below the five-year average for this time of year, the EIA said.

Iran's armed forces fired missiles at a US aircraft late Thursday local time, the local media reported, adding that the search for the wreckage of the destroyed aircraft is ongoing, with no confirmation from the US.

The latest military action in southern Iran came hours after the US Central Command said that Iran had launched a ballistic missile toward Kuwait and deployed attack drones in and around the Strait of Hormuz.

US and Iranian negotiators have agreed to a memorandum of understanding that would extend the ceasefire for 60 days and allow "unrestricted" passage of commercial vessels through the Strait of Hormuz without paying tolls to Iran, according to media reports earlier on Thursday.

However, the agreement between the US and Iran still needs final approval from President Trump, who has told mediators he wants a few days to make the final decision.

The White House confirmed the development toin an emailed response, citing US officials.

However, US Treasury Secretary Scott Bessent declined to confirm reports of the tentative agreement, saying it would be "a mistake to get out ahead of the president."

"Everything depends on what the president wants to do," Bessent said during a White House press briefing on Thursday.

The tentative agreement between the US and Iran could bring the two sides closer to reopening the Hormuz and help alleviate a global energy crisis that has sent fuel costs to record highs.

The International Energy Agency said in its May Oil Market Report that with Hormuz tanker traffic still restricted, cumulative supply losses from Arabian Gulf producers already exceed 1 billion barrels, with over 14 million barrels per day of oil now shut in.

Meanwhile, the US Department of the Treasury imposed additional sanctions on oil sales tied to Iran's military, alleging that Tehran was using illicit crude revenue to rebuild its armed forces.

The sanctions follow the blacklisting of Iran's Persian Gulf Strait Authority by the Treasury for allegedly extorting commercial vessels in the Hormuz to fund the Islamic Revolutionary Guard.

"Iran's military generates revenue through Iranian crude oil sales via an array of front companies to help fund its reconstitution and threaten its neighbors," the Department said in a statement.

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