EMEA Oil Update: Crude Falls as US-Iran Truce Holds Despite UAE Attack, Hormuz Skirmishes
EMEA crude futures retreated in after-hours trading on Tuesday as a fragile US-Iran truce appeared to hold, despite a drone attack on energy infrastructure in the UAE and renewed skirmishes in the Strait of Hormuz.Brent crude futures dropped by 3.57% to $110.38 per barrel, while Murban oil futures were down 1.37% to $105.83/bbl.Soojin Kim, research analyst at MUFG, said oil prices edged lower after a sharp rally as markets reacted to renewed US-Iran clashes that cast doubt on the fragile ceasefire.On Tuesday, the UAE's Defense Ministry said that Iran had launched missiles and unmanned aerial vehicles, even as Washington said a fragile ceasefire with Iran was intact despite skirmishes in the Hormuz the previous day.The attacks on the UAE come after Iran's Revolutionary Guards Navy issued a map it said was expanding the areas under Tehran's control near the Strait to include the UAE's ports of Fujairah and Khorfakkan, as well as the coast of the UAE's emirate of Umm Al Quwain.The US military said it had destroyed six Iranian small boats, as well as cruise missiles and drones, after President Trump sent the navy to escort stranded tankers via the strategic waterway in a campaign he called "Project Freedom."US Defense Secretary Pete Hegseth said the operation to protect commercial ships was temporary, and the four-week-old truce was not over."We're not looking for a fight", Hegseth said at a press conference on Tuesday. "Right now the ceasefire certainly holds, but we're going to be watching very, very closely".Hegseth said the US had secured a path through the Hormuz and that hundreds of commercial ships were lining up to pass through. Danish shipping giant Maersk reportedly said one of its commercial vessels successfully transited the Strait under US military protection."Despite US plans to restore shipping, security risks may keep the route closed until a US-Iran deal, sustaining concern over energy prices," Saxo Bank strategists said in a note on Tuesday.Trump said on Tuesday dismissed Iran's military capability and said Tehran "should wave the white flag of surrender", but is too proud to do so.Meanwhile, the Iranian Foreign Minister Abbas Araghchi said in a social media post on X that talks with the US were "making progress" but Washington and the UAE "should be wary of being dragged back into a quagmire."Araghchi said events in Hormuz made clear "there's no military solution to a political crisis."On the supply front, Asia's top crude importers are stepping up efforts to reroute supplies away from the Hormuz, moving beyond short-term contingency measures as regional tensions persist.Kpler said China and India secured about 90% of their average April import volumes through alternative sources and routes, relying on substitute barrels and diversified shipping lanes.Japan and South Korea, in contrast, leaned more heavily on strategic petroleum reserves to cushion supply disruptions, the shipping data firm said.