Diplomatic ceasefire affirmation drove 4% crude selloff amid heavily militarised Hormuz transit resumptions

Crude futures retreated sharply in Tuesday trading, shedding approximately 4% as algorithmic flows priced in US affirmations of an intact Middle Eastern ceasefire alongside the first verified resumptions of maritime transit.

The international Brent contract fell $4.57 (4%) to settle at $109.87 a barrel, while US WTI crude dropped $4.15 (3.9%) to close at $102.27.

The bearish reversal effectively unwound near-term kinetic risk premiums after Washington officially maintained its diplomatic posture despite ongoing regional friction.

Despite the severe paper selloff, physical normalisation remains highly restricted and heavily militarised. The US military confirmed the successful transit of two merchant vessels through the Strait of Hormuz, directly supported by Navy guided-missile destroyers under an escort campaign termed "Project Freedom". Commercial shipping firm Maersk independently verified the passage of the US-flagged Alliance Fairfax under this heavy military escort.

While hundreds of commercial vessels remain severely backlogged outside the critical waterway, these isolated, militarised crossings represent the first verified breach of the absolute logistical paralysis.

The sustained macro-deficit generated by the broader maritime closure continues to draw heavily on alternative global reserves. Forward spot markets are actively awaiting critical US inventory data, with structural models projecting a substantial 3.3 million-barrel draw in domestic commercial crude stockpiles for the week ended May 1. If realised, this fundamental drain would mark the second consecutive weekly withdrawal by energy firms, reinforcing the acute transatlantic tightness generated by the protracted Middle Eastern supply shock.

Written by: Aiman Haikal