Brent Plunges Nearly 10% for the Week as Ceasefire Extension, Hormuz Reopening Near

Oil prices are set for their steepest weekly drop in two months, with ICE Brent falling nearly 10% to around $92 per barrel, as a 60-day ceasefire extension and a partial reopening of the Strait of Hormuz are reported to be close to a done deal. The potential easing of geopolitical tensions has rapidly calmed supply disruption fears that had lifted crude sharply in recent weeks. Japan’s crude imports collapsed 66% year-over-year in April to just 850,000 barrels per day, the smallest monthly volume since 1967, as Middle East flows evaporated amid the Iran conflict. While the U.S. Treasury Department tightened sanctions on Iran’s oil trade — adding eight tankers and 15 entities in Hong Kong and the UAE to its blacklist — the prospect of a truce overwhelmed the sanctions news. Production at Kazakhstan’s Tengiz field, operated by Chevron (NYSE:CVX), also fell sharply on May 26 due to an accident, dropping from 950,000 b/d to 60,000 b/d, but supply concerns were overshadowed by the ceasefire narrative.