Deal Hopes Shake, Oil Rises 2%
Oil prices rose on Thursday (May 28) after Iran's Revolutionary Guard Corps (IRGC) said it targeted a US airbase in response to a US attack on the port city of Bandar Abbas. This development revived the supply risk premium, after the market had cut it the previous day due to hopes for a US-Iran deal.
Brent crude rose US$1.75 (+1.86%) to US$96.04 per barrel at 13:14 GMT, while the more active Brent August contract rose about 2% to US$94.06. The July Brent contract is scheduled to expire on Friday. WTI rose US$2.08 (+2.35%) to US$90.76.
The previous day, both benchmarks had fallen more than 5% and hit one-month lows as the market priced in the possibility of a deal that would end the war and reopen the Strait of Hormuz. However, that narrative faltered again after President Donald Trump dismissed reports that a compromise with Tehran was imminent, while the IRGC declared retaliatory strikes after the US military attacked an Iranian drone operation near Hormuz.
In the physical market, ship tracking data from LSEG and Kpler showed two supertankers and one LNG tanker exiting the strait earlier this week with their transponders turned off and heading towards India and China, indicating that flows are returning, though not yet normal. On the US inventory front, the API reported that crude oil stocks fell by 2.8 million barrels last week—the sixth consecutive week of declines—which added short-term support to prices.
The market now awaits official inventory data from the EIA, released Thursday (delayed one day due to the Memorial Day holiday). For further direction, the focus remains on two variables: whether the escalation around Hormuz continues, leading to a larger increase in risk premiums, and whether the US stockpile data confirms a tight physical market amid geopolitical volatility. (Arl)*
Source: Newsmaker.id
