CRUDE WRAP: WTI (Q6) SETTLES USD 1.58 HIGHER AT USD 71.92/BBL; BRENT (Q6) SETTLES USD 1.52 HIGHER AT USD 75.26/BBL

The crude complex saw strength on Thursday, albeit in pretty thin geopolitical newsflow, as participants await any further Middle East rhetoric. While benchmarks started the European morning on the backfoot, to see WTI and Brent hit troughs of USD 68.90/bbl and 72.06, respectively, they ground higher through the duration of the US session, albeit on no clear headline catalyst. Despite saying that, and no move seen on it, WSJ reported that Iran's IRGC attacked a Singapore-flagged cargo ship on Thursday in the Strait of Hormuz. Following the attack, but prior to the WSJ report, the UN shipping agency said it had paused the evacuation plan for stranded ships and seafarers out of Hormuz after the ship attack, and the UN's Hormuz evacuation plan will be paused until further clarity is obtained.

Moreover, the Lebanon situation continues to remain up in the air, with Al Arabiya recently reporting that the meeting between Lebanon and Israel reached a dead end due to the issue of withdrawal from the south of Lebanon. Prior to this, a US official suggested that Israel would begin withdrawing from buffer zones in southern Lebanon, but this was then refuted by both Lebanon and Israel. Iran’s Quds Force Chief warned that if Israel does not withdraw by today, then by tomorrow it will be “forced to flee”. For now, it remains a domestic issue, though with a risk that Iran once again closes the Strait, blaming the US/Israel for breaking the ceasefire. As is known, the long-term danger is that ships become worried about transiting the Strait once again, and therefore, oil flows may begin waning.

On the supply footing, Saudi Arabia is reportedly set to restart Ras Tanura (550k BPD) oil exports as Gulf flows rise. Operations at Venezuela's El Palito refinery (130k BPD) are partially shutdown due to a power outage related to the earthquakes. Finally, Russia's Norsi oil refinery (290-320k BPD) reportedly halted operations due to a Ukrainian drone attack.

In the energy space, there was little move to US data, namely PCE (May), as risk events await.