Key facts
- Oil prices were nearly flat as investors weighed the impact of supply disruptions from the war in the Middle East.
- President Donald Trump warned that the U.S. military would hit Iran "very hard tonight" and take control of its oil and gas infrastructure.
- Brent futures were down 0.1% and U.S. West Texas Intermediate (WTI) crude gained 0.1%.
- Weaker Chinese fuel demand is helping to contain the Iran-driven oil rally.
- Iran's joint military command announced the closure of the Strait of Hormuz for oil tankers and commercial ships.
- The U.S. military stated that commercial ships continued to transit in and out of the Strait of Hormuz.
Oil prices were nearly flat on Thursday as investors weighed the impact of supply disruptions from the war in the Middle East, following President Donald Trump's warning that the U.S. military would hit Iran "very hard tonight." Hostilities between the U.S. and Iran have recently escalated, with Tehran declaring the Strait of Hormuz closed after Washington launched additional strikes against the country. Trump also stated the U.S. will soon take control of Iran's oil and gas infrastructure and markets.
Brent futures were down 0.1% to $92.98 a barrel by 1303 GMT, while U.S. West Texas Intermediate (WTI) crude gained 0.1% to $90.10. Three Iranian sources and a European official said the U.S. and Iran were exchanging messages on details of a memorandum after reaching a political understanding, but some issues still had to be discussed in detail, including a mechanism for the release of billions of dollars in frozen Iranian funds.
Weaker Chinese fuel demand is also helping to contain the Iran-driven oil rally, with data showing falling gasoline and diesel use as well as lower crude imports. Iran's joint military command announced the closure of the Strait of Hormuz, including for oil tankers and commercial ships, saying any vessel attempting passage will come under fire. The strait is a vital waterway that handles about 20% of global oil and gas shipments. MUFG analyst Soojin Kim said the latest escalation adds uncertainty to already fragile ceasefire negotiations and risks prolonged supply disruptions.
On Wednesday, the U.S. military said on X that commercial ships continued to transit in and out of the Strait of Hormuz and that no U.S. warships had been struck, after Iran's state media reported U.S. ships near it were targeted by missiles and drones. Three more LNG tankers have slipped out of the strait with their transponders off, heading to Asia, though the timing is unclear. India reported an incident involving a vessel off the Port of Shinas in Oman earlier on Thursday, the third such incident this week, but Indian refiners told Reuters they had secured enough crude to meet their needs through at least August. Abu Dhabi National Oil Co (ADNOC) and some other sellers managed to export crude, some of which was offered to buyers in Asia.
U.S. crude inventories fell by 7.2 million barrels to 426.5 million in the week ended June 5, the U.S. Energy Information Administration said on Wednesday, compared with analysts' expectations for a draw of 4 million barrels. OPEC's output in May slid to its lowest level in more than two decades, a Reuters survey showed, as a U.S. naval blockade curbed Iran's exports and Tehran's effective closure of the Strait of Hormuz slashed shipments from other Gulf producers.