Brent: Despite fresh strikes, oil retreats around $91

Geopolitical Risk No Longer Enough to Drive Up Oil Prices

Oil prices fell despite a new wave of tensions in the Middle East. Brent crude was trading around $91 a barrel on Wednesday, while U.S. WTI was around $88. Prices initially rose following new U.S. strikes on Iranian targets, but this movement later faded. The market appears to be factoring in military risk without, at this stage, anticipating a major and lasting disruption in oil supply.

U.S. Strikes Following the Destruction of an Apache Helicopter

Tension remains high. The American strikes follow the destruction of an American Apache helicopter near the Strait of Hormuz, a strategic passage for global hydrocarbon trade. Such events typically lead to a risk premium on crude prices due to fears of disruption in maritime traffic or regional exports. However, the market's reaction has been restrained, indicating that traders are waiting for concrete evidence of a physical supply blockage before significantly driving prices higher.

Chinese Demand Weighs on Market Outlook

One of the obstacles comes from China. Concerns about local demand are helping to limit the rise in oil prices. The situation is paradoxical: Chinese producer prices increased by 3.9% year-over-year in May, reaching their highest level since July 2022, but consumer inflation remains much more contained, at 1.2%. This configuration indicates pressure on industrial costs without a real acceleration in final demand. For the oil market, it curtails the notion of a significant rebound in energy consumption in Asia.

US Stocks Fall, But Signal Remains Inadequate

Inventory data nevertheless provides support for prices. According to market sources cited by Reuters from the American Petroleum Institute figures, U.S. crude stocks fell for the eighth consecutive week, with a decrease of 9.12 million barrels in the week ending June 5. Gasoline inventories also decreased, while distillates increased. This suggests a tighter physical market, but for now, it is not enough to offset doubts about global demand and diplomatic uncertainty.

A Market Divided Between Supply Tension and Cautious Demand

The session highlights the difficulty of interpreting oil in such an unstable environment. On one hand, military risks around Iran and the Strait of Hormuz remain likely to cause rapid movements in prices. On the other hand, the absence of an immediate disruption in supply, caution regarding China, and the anticipation of new U.S. macroeconomic data limit the extent of the reaction. Thus, Brent remains high compared to its spring levels, but its decline around $91 indicates that the market is not yet treating the latest strikes as a confirmed supply shock.

A Signal to Watch for Inflation and Central Banks

The trajectory of oil remains significant for investors and central banks, as a prolonged rise in energy prices could reignite inflationary pressures. Conversely, the decline observed on Wednesday temporarily limits the scenario of an immediate price surge. Caution remains necessary, however: crude prices can fluctuate rapidly based on the evolution of military operations, diplomatic negotiations, and inventory data. At this stage, the market is mainly sending a message of waiting rather than a clear signal of a new oil price spike.