Summer demand convergence propelled Brent to $120 as massive US inventory draws expose prolonged maritime blockade

Crude futures surged over 6% in Wednesday trading, breaching multi-week highs as algorithmic flows priced in deadlocked diplomacy and a prolonged maritime disruption.

The international Brent contract for June delivery rose $6.77 (6.1%) to settle at $118.03 a barrel, accelerating in post-settlement trading to strike $120 for the first time since June 2022.

Concurrently, the US WTI June contract surged $6.95 (7%) to close at $106.88.

The fundamental deficit continues to compound rapidly, with quantitative models estimating over $50 billion in crude supply structurally removed since the conflict began. This logistical paralysis is forcing immediate operational pivots across the Middle East; the Abu Dhabi National Oil Company formally notified clients of impending crude loading reroutes outside the Gulf to bypass the closed Strait of Hormuz.

Acknowledging these severe constraints, the US administration initiated contingency dialogues with domestic producers to mitigate a blockade now projected to last for months.

This Middle Eastern physical squeeze is actively colliding with the onset of peak seasonal consumption. Domestic US balances recorded severe fundamental drawdowns, with commercial crude stockpiles plunging by over 6 million barrels—drastically eclipsing consensus estimates of a fractional 200,000-barrel decline. This structural drain extended heavily across the refined product complex, with both gasoline and distillate inventories posting outsized declines, guaranteeing intensely tight transatlantic spot markets as summer fuel demand accelerates.

Written by: Aiman Haikal