CRUDE WRAP: WTI (Z6) SETTLES USD 0.67 LOWER AT 97.15/BBL; BRENT (X6) SETTLES USD 0.03 HIGHER AT USD 108.82/BBL

The crude complex was mixed in two-way trade, as participants await any notable de- or re-escalatory action. On Wednesday, there were a few market-moving headlines, and benchmarks saw pressure as Iran's Foreign Minister Araghchi said Iran is ready for diplomacy but will defend itself, adding that the US has shown no willingness to reach an understanding and there is little reason to expect progress now. Following this, Al Hadath reported that Iran's Supreme National Security Council Secretary Rezaei informed Pakistan's Army Chief Munir of Iran's explicit rejection of the American demands. Furthermore, the US issued new Iran-related sanctions but also authorised the offloading of cargo from some blocked Iranian vessels, which participants cited as the trigger for crude hitting session lows. Note, this is a short grace period rather than relief: newly sanctioned ships have 30 days to safely wind down existing operations, after which they are fully cut off. The licence only permits the offloading of non-Iranian-origin cargo and bans delivery to Iran or Russia entirely. Elsewhere in the Middle East, Fars reported that a Houthi official said all negotiations have reached a deadlock because Saudi Arabia seeks to impose its demands on the Yemeni people, which they will not accept.

Still on geopolitics, but away from the Middle East, a US official said Russia accepted the US proposal for a trilateral meeting with Ukraine. On the supply side, Argus reported, citing sources, that Saudi Aramco facilities at Yanbu and Shaybah are undamaged, after the Houthis claimed they had hit the facilities with drones on Monday.

In the weekly EIA data, crude and gasoline saw larger draws than forecast, consistent with last night's private data, while distillates saw a surprise build. Crude production was down 410k BPD W/W to 13.269mln BPD, with the SPR falling to 282.7mln bbls (prev. 283.0mln bbls).

Sessions of this kind, where the complex chops two-way on competing geopolitical headlines without a confirmed supply outage, have historically resolved in fade-the-risk-premium fashion unless physical flows are actually interrupted, which is why the Aramco facilities being reported undamaged matters more than the drone claim itself. The licence authorising offloading from sanctioned Iranian vessels is standard wind-down mechanics rather than sanctions relief, and the pattern in past sanctions rounds has been an initial risk-off read on the headline followed by a retracement once the 30-day grace structure is parsed; the explicit bar on delivery to Iran or Russia reinforces that framing. The roughly USD 11.67 Brent-WTI spread flagged by the settles is wide by historical norms and is the usual signature of a geopolitical premium concentrated in the waterborne benchmark, worth monitoring for compression if diplomacy headlines gain traction. On the data, larger-than-forecast crude and gasoline draws alongside a distillate build fit the recurring pattern of the EIA confirming the prior night's private survey, which tends to mute the release's follow-through. The sharp W/W production decline in the EIA print is the kind of move that in past episodes has typically been weather or disruption-related rather than a trend shift, so the next weekly print is the tell on whether it reverts. The forward calendar is headline-driven: any concrete de-escalatory step on the Iran or Russia-Ukraine tracks, versus renewed claims against Gulf infrastructure, is what has historically determined whether the embedded premium builds or bleeds.