By: Bruno Santos, Market Intelligence Analyst
Yesterday (May 27, 2026), the most active Brent contract closed sharply lower, totaling USD 94.29/bbl (−5.3%), while WTI closed at USD 88.68/bbl (−5.5%). Both benchmarks reached their lowest levels since April 17, reversing the 3.6% advance in the previous session amid speculations regarding a potential peace agreement between the US and Iran.
The decline was fueled by reports of an alleged preliminary agreement between Washington and Tehran to restore navigation in the Strait of Hormuz and lift blockades, reducing the geopolitical risk premium and triggering technical selling. However, both the White House and Trump denied any proximity to an understanding, with divergences persisting on the control of the strait, sanctions, and nuclear issues.
This morning (May 28, 2026), Brent rebounded and is trading up 2.5%, at USD 96.67/bbl as of 08:20 AM Brasília time, driven by mutual attacks between the US and Iran and additional sanctions against Iranian authorities. The market is weighing that, given the military escalation and diplomatic deadlock, the likelihood of a full reopening of Hormuz in the short term has decreased, restoring the risk premium throughout the curve.
Aerial attacks and blockades sustain risk premium in Hormuz
Hours after the rejection of the preliminary deal, cross-attacks between Iran and the US—including air strikes in Bandar Abbas—intensified the uncertainty surrounding stability in the Persian Gulf region. The move also involved Iranian retaliation against US bases and new Israeli bombings in southern Lebanon.
Why it matters: The attacks and diplomatic impasse keep oil supply constrained, elevating the risk premium on contracts and impacting short-term price formation. The effect is immediate, with Dubai premiums rising against Brent, as the market interprets this renewed offensive as an obstacle to diplomatic progress. The market is once again monitoring ship movement in the strait and developments in sanctions.
Overview: Reports indicate that two VLCCs and an LNG ship crossed Hormuz with transponders off this week, heading to India and China. The indications point to this movement conducted under Tehran’s toll system policy.
What to expect? If the military conflict escalates, the reopening of Hormuz tends to be delayed and Brent could return to levels above USD 100/bbl. It is important to underscore that ongoing difficulties in resuming dialogue have continually provided momentum for the resumption of the bullish bias in pricing.
US Inventories: Sixth consecutive week of decline
API data revealed another decline in US crude inventories (down 2.8 million barrels), accelerating the depletion of reserves and underscoring the impact of the Hormuz crisis on the global balance. Gasoline inventories fell 3.2 million barrels, while diesel increased by 1.1 million.
Why it matters: The persistent reduction in American inventories supports the argument for global scarcity and pressures the US petroleum balance. The impact is gradual, materializing as global reserves begin to fall more rapidly, with a greater volume of buyers directing their orders to the US market, which continues to operate with elevated commodity production.
Overview: The weekly decline in US inventories has continued since April, reinforcing the physical market’s vulnerability amid the crisis.
India Demand: Flight cuts signal disruption
India’s two largest airlines announced reductions in domestic flights for June and July, suggesting adjustments to demand and possible secondary effects from price shocks and regional instability.
Why it matters: Weakening demand resulting from lower global product availability is a key channel for gasoline and refined price adjustments. The effect is gradual, with an initial impact on product crack spreads and expectations for Asian consumption. The key variable now becomes the pace of recovery in flows and consumption.
Overview: The Asian market, responsible for absorbing a significant portion of the Middle East’s surplus, faces direct impact from instability in Hormuz.
What to expect? Despite demand destruction caused by tighter supply, the supply reduction is significantly larger, which results in an accelerated global inventory drawdown. It is notable that since the conflict began, the IEA estimates a decline of over 250 million barrels in global crude and product reserves, a trend expected to persist until the Strait of Hormuz is fully reopened.
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WTI and Brent crude are moving to different beats as a possible U.S. Iran deal reshapes the oil market. The two benchmarks are pricing Strait of Hormuz risk in their own ways, and the gap between them says a lot about where crude goes next.
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