Brent Halts Rally Amid Hopes of Iran Conflict Talks

Brent crude oil futures pulled back toward $82 per barrel on Wednesday after a rally that had pushed prices to the highest since July 2024, driven by concerns over the Middle East conflict disrupting global energy flows. Gains eased following reports that Iranian intelligence officials had indirectly contacted the US via another country’s spy agency to discuss terms for ending the conflict, raising hopes of a potential de-escalation. The crisis has already forced major producers to halt output and severely limited traffic through the Strait of Hormuz. US President Donald Trump said the US International Development Finance Corporation would provide insurance for vessels and naval escorts if needed to secure energy shipments. Meanwhile, Saudi Arabia reported an attempted attack on its Ras Tanura refinery and confirmed plans to divert supplies to the Red Sea to maintain operations, keeping markets focused on regional infrastructure risks.

Brent crude oil futures climbed toward $84 per barrel on Wednesday, the highest since July 2024 and extending its advance for a fifth session, as the Iran crisis disrupted supply in the key producing region. Hostilities entered a fifth day, with Israeli and US strikes on Iran triggering retaliatory attacks on regional energy infrastructure. Iraq, a major crude producer, cut output by about 1.5 million bpd, roughly half its production, due to storage limits and blocked exports, with the risk of halting nearly 3 million bpd if exports do not resume. Iran also targeted tankers in the Strait of Hormuz, a route for about 20% of global oil and LNG, leaving traffic halted for a fourth day. However, gains were capped as President Donald Trump said the US would insure vessels to maintain energy and trade flow, with naval escorts available if needed. Meanwhile, API data showed US crude inventories rose 5.6 million barrels last week, exceeding expectations for a 2.19 million-barrel build.

Brent crude eased toward $80 per barrel on Tuesday, paring massive gains as President Trump’s pledge to provide naval escorts for tankers in the Strait of Hormuz calmed immediate supply panic. While prices surged over 8% earlier in the session following drone strikes on Saudi Arabia’s Ras Tanura refinery and fires at the UAE hub in Fujairah, the military commitment to ensure the free flow of energy triggered a sharp reversal from daily peaks. Despite the retreat, oil remains at June highs as shipping activity through the Persian Gulf remains stalled and insurers withdraw war-risk coverage. This logistical paralysis limits the relief from the escort announcement, as roughly one-fifth of global consumption remains at risk. Furthermore, the death of Iran’s Supreme Leader and the subsequent 4-day escalation of strikes on Gulf energy hubs continue to fuel volatility. Markets now focus on the resilience of UAE air defenses against a barrage of Tehran-backed missiles.