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Crude futures rallied in Tuesday trading, whipsawing as algorithmic flows digested an indefinite extension of the US-Iran ceasefire alongside rapidly deteriorating prospects for a comprehensive diplomatic resolution.

The international Brent contract for June delivery edged up 3.1% to settle at $98.48 a barrel, having briefly breached the $100 threshold in post-settlement trading after reports confirmed the cancellation of high-level US diplomatic trips to Islamabad.

Concurrently, the active US WTI June contract rose 2.6% to settle at $89.67 a barrel in New York, while the expiring May contract closed at $92.13.

Despite the formal ceasefire extension, immediate physical relief remains entirely absent as the US naval blockade of the vital Middle Eastern maritime route continues unabated. Logistical flows through the Strait of Hormuz are effectively paralysed, with vessel tracking data registering a mere three transits over a 24-hour period. The structural deficit is compounding at a historic rate, with institutional trading houses now estimating the cumulative supply loss from the seven-week disruption has reached one billion barrels.

The acute downstream impact of this prolonged maritime closure is becoming increasingly visible in domestic US balances. Industry figures revealed a massive 4.5 million-barrel draw in US commercial crude stockpiles, aggressively countering initial consensus estimates for a much smaller decline. This structural drain extended heavily across the refined product complex, with gasoline and distillate inventories plunging by 5.2 million and 4.6 million barrels respectively, underscoring the severity of global consumers pulling from alternative reserves to replace stranded Middle Eastern crude.

Written by: Aiman Haikal