Crude Oil
US-Iran Uncertainty Keeps Geopolitical Risk Elevated
Crude prices continued to swing on headlines related to a potential US-Iran agreement this week. Although prices remain below $100/Bbl, uncertainty surrounding a possible deal helped keep crude supported. On Friday, WTI settled at $90.54/Bbl, up $3.18 from the previous week’s close.
Prices moved higher early in the week after Iran announced it was suspending communications with the US, citing Israel’s expanded military operations in Lebanon as a violation of ceasefire understandings. Iran has indicated that any broader agreement will likely depend on progress toward a ceasefire in Lebanon. President Trump said discussions with Iran continue to advance, while Lebanon’s Hezbollah rejected a US-backed ceasefire proposal aimed at ending hostilities with Israel.
With no agreement in place, flows through the Strait of Hormuz remain materially disrupted. The supply interruption has begun to affect consumption patterns and trade flows. Reduced access to Middle Eastern crude weighed on imports across Asia, contributing to a sharp decline in Chinese crude arrivals during May. According to Kpler, China’s crude imports fell to 6.7 MMBbl/d, down from an average of approximately 10.4 MMBbl/d in 2025. Goldman Sachs also noted that April oil sales data from China and Western Europe suggest roughly 2 MMBbl/d of downside risk to the bank’s global oil demand estimates for the month. Major trading houses have echoed similar concerns as Vitol estimates that approximately 4 MMBbl/d of global demand has been deferred, with some buyers postponing purchases while awaiting greater clarity on a potential US-Iran agreement.
Meanwhile, Trafigura Chief Economist Saad Rahim said elevated inventories, strategic stockpile releases, and weaker demand across parts of Asia and Africa have provided temporary relief but do not address the underlying supply risks facing the market. Paul Bloxam of HSBC Holdings warned that global oil inventories could approach critical functional levels, increasing the risk of sharper price volatility and potential supply shortages if disruptions persist.
Trump described negotiations as being in their “final stages,” though he provided few details, while Iranian Foreign Minister Abbas Araghchi maintained that talks had yet to produce meaningful results. Despite ongoing diplomatic efforts, limited evidence of a breakthrough has kept geopolitical risk firmly in focus. As a result, crude prices remain elevated while disruptions to traffic through the Strait of Hormuz continue. AEGIS maintains a neutral outlook.