Brent slips to $91.36 as US-Iran strikes offset eighth weekly US crude draw

Brent settled lower after an early rally faded, ending the session at $91.36 a barrel, down 0.1%. US West Texas Intermediate (WTI) crude dropped 10 cents to $88.10 a barrel. Bloomberg reported that the benchmark contracts initially rose during the Asian morning as the US military struck Iranian sites, before drifting lower as traders took profits.

The trigger was an escalation in hostilities after President Donald Trump committed to retaliate for the downing of a US Apache helicopter. The Telegraph reported that the strikes put a fragile ceasefire between Washington and Tehran at risk, with Tehran warning it would resume hostilities if Israel kept attacking Hezbollah in Lebanon. Priyanka Sachdeva, senior market analyst at Phillip Nova, said the exchanges have reintroduced a 'geopolitical risk premium' into oil markets even as diplomatic efforts continue.

What this means for UK energy buyers

Oil does not set UK gas or power prices directly, but it shapes the cost of oil-indexed LNG cargoes and the wider risk premium across the energy complex. With Tehran maintaining a blockade on most traffic through the Strait of Hormuz, a route carrying a significant share of the world's oil and LNG, sustained disruption would feed through to NBP gas and UK power curves. If your renewal window opens before the third quarter, when demand typically rises, the FT noted that ING strategists see scope for prices to climb further with no resolution in sight and the global market tightening daily.

The chart below shows Brent over recent months, giving a sense of how far the geopolitical risk premium has lifted the benchmark.

The price points and events to watch:

• Brent front-month (currently $91.36/bbl)
• WTI front-month ($88.10/bbl)
• Weekly American Petroleum Institute (API) inventory data
• Maritime traffic through the Strait of Hormuz
• Progress on the US-Iran ceasefire negotiations

The supply side is doing its own work on prices. US crude inventories fell for the eighth consecutive week, down 9.12 million barrels in the week ending 5 June according to API data, with gasoline stocks down a further 1.19 million barrels. The US has been a marginal supplier through the conflict, boosting exports to Asia and Europe; a shrinking inventory base limits how long that can continue.

Watch the Hormuz traffic data and the next API print. The US Energy Secretary said on Tuesday that Gulf maritime traffic and Hormuz oil exports are increasing despite the conflict; if that reverses, or the US draw extends to a ninth week, the curve has room to move higher into Q3.