CRUDE WRAP: WTI (U6) SETTLES USD 0.87 LOWER AT USD 83.59/BBL; BRENT (V6) SETTLES USD 1.21 LOWER AT USD 86.88/BBL
Crude futures eased amid reports that Iran is continuing to talk with Oman about management of the Strait of Hormuz, while a Pakistan Foreign Ministry spokesperson also said that talks between Tehran and Washington regarding the Strait and de-escalation remain ongoing. Reports also suggest that transit through the Strait has rebounded, with at least seven ship pairs transferring cargo near Sohar today; two shippers are moving volumes near pre-escalation levels, while ADNOC cargoes delayed for weeks are reaching buyers, Bloomberg said. Still, flows remain below pre-war levels despite US military escorts and resumed regional shipments. Iran’s IRGC, however, continues to hold its position that ships may transit if they accept its arrangements. Iran yesterday rejected Oman’s joint framework, and proposed sole authority over its side of the Strait of Hormuz, as well as partial control over the southern lane, which would give Iran operational control over inbound and outbound maritime traffic. Today, the IRGC said they will "punish aggressors today" following recent attacks.
Elsewhere, Russia’s Ryazan refinery (17mln tonnes annual capacity) halted crude processing after a Ukrainian drone attack on Wednesday, and may remain shut for two weeks; Reuters said that despite the shutdown, it continued offering gasoline and diesel on the St Petersburg International Mercantile Exchange.
And in the North Sea, UK PM Burnham signalled that his government may support new North Sea oil and gas drilling, saying the UK would not “ignore” the UK domestic energy resources. Burnham said he told President Trump that the UK would take a pragmatic approach to the North Sea.
Settlements of this kind during a Hormuz escalation carry an unusually large geopolitical risk premium component, and the established pattern is that the premium bleeds out on any sign that transit is functioning, regardless of whether the underlying dispute is resolved: reports of resumed ship pairings, escorted convoys and delayed cargoes finally reaching buyers are precisely the kind of flow evidence that has historically unwound it faster than diplomatic progress alone. The countervailing read is that the IRGC's terms, partial control of the southern lane and a rejected joint framework, leave the structural risk unresolved, and episodes where a chokepoint's management is contested have tended to keep freight rates, insurance premia and the prompt spread elevated even as flat price drifts. The distinction worth drawing is between WTI and Brent exposure: a Hormuz disruption prices more directly into Brent and into Middle East crude differentials, while the US grade is cushioned by domestic supply, which is the usual reason the Brent premium widens in these episodes. The Russian refinery outage from the drone strike is the counterweight on products, feeding gasoline and diesel cracks rather than crude flat price, and past refinery shutdowns of this type have shown up in distillate spreads before crude. Worth watching next are tanker traffic counts through the strait, war risk insurance quotes and timespreads at the front of both curves, which have been the cleanest tells on whether the premium is rebuilding or deflating. The North Sea signalling is longer-dated supply politics, not a near-term price driver.