Brent Crude Drops Below $95 as Ceasefire Signals Counter Iran's Overnight Strike on Kuwait Airport

Brent crude futures fell to $94.71 per barrel on Thursday morning in ICE Futures Europe trading, about 3% below Wednesday's settlement, as diplomatic signals on an Iran ceasefire reversed the prior session's gains. West Texas Intermediate declined to $92.69 per barrel, a drop of 3.47%, per CME Group data. Both contracts reversed Wednesday gains of more than 1%, which had been driven by Iranian ballistic missile and drone strikes on Kuwait's international airport and Bahrain's U.S. Fifth Fleet headquarters.

The Overnight Attacks and the Market Reversal

Iran launched missiles and drones at Kuwait International Airport and a U.S. military airbase in Bahrain on June 2-3. An Indian national was killed at Kuwait's airport, and several others sustained injuries. U.S. Central Command said it had shot down Iranian drones targeting civilian ships and separately struck a telecommunications tower on Iran's Qeshm Island. Iran's Foreign Ministry countered that the U.S. had violated ceasefire terms, placing direct responsibility on Kuwait and Bahrain for supporting U.S. operations.

The June 4 reversal came on two events. U.S. Secretary of State Marco Rubio declared "the war is over," conditioning any sanctions relief on Iran abandoning nuclear activities. Israel and Lebanon also reached a conditional ceasefire requiring Hezbollah compliance, a development Iran had previously said it would use as a precondition for any broader U.S. peace deal. Together, the signals moved crude lower in early trading hours.

Hormuz Bypass Capacity at 35% of Pre-Crisis Throughput

The Strait of Hormuz has been closed to commercial shipping since February 28, 2026, when coordinated U.S. and Israeli airstrikes killed Iran's Supreme Leader. Before the conflict, roughly 20 million barrels per day of petroleum liquids and one-fifth of global LNG transited the chokepoint, according to the U.S. Energy Information Administration. Saudi Arabia's East-West Pipeline, connecting the Eastern Province to the Red Sea port of Yanbu, has reached its rated maximum capacity of 7 million barrels per day. That represents approximately 35% of the strait's pre-crisis petroleum throughput.

Saudi Aramco, the Saudi state oil company, cut production to roughly 8 million barrels per day in March from approximately 10 million barrels per day before the conflict. EIA data shows Saudi Arabia accounted for 38% of Hormuz crude flows in 2024, or approximately 5.5 million barrels per day. Even with the East-West Pipeline at full capacity, a structural throughput gap remains that no bypass route has closed.

From the $126 Peak: A $31 Per Barrel Reversal

Brent reached $126 per barrel in March 2026, recording what commodity analysts described as the largest single-month price increase in modern history. Thursday's $94.71 represents a retreat of $31.29 per barrel, or roughly 25%, from that peak. Oil's May 2026 monthly decline was the steepest since the COVID-19 pandemic, per CNBC market data. Most of that reversal priced in a partial Hormuz reopening scenario that has not yet materialized.

What Analysts Project If the Strait Reopens

Saudi Aramco CEO Amin Nasser warned publicly on May 11 that global oil markets will not normalize until 2027 if the Hormuz disruption continues past mid-June. Wood Mackenzie's "quick peace" scenario projects Brent easing to approximately $80 per barrel by end-2026. A broader consensus across analyst forecasts puts the near-term price range at $90 to $100 per barrel while ceasefire negotiations remain unresolved.

The U.S. and Iran are reported to have "mostly agreed" on terms for a 60-day memorandum of understanding extending a ceasefire, though the deal still requires formal sign-off. Iran seeks access to frozen oil revenues, export waivers, and continued leverage over the Strait of Hormuz as part of any final settlement. Rubio's "war is over" declaration on June 4, if followed by concrete terms, would remove the risk premium that has kept Brent above $90 for most of the crisis.

Gas Markets: JKM and TTF in Context

Asian LNG spot prices measured by the Japan-Korea Marker fell to approximately $18 per MMBtu for June delivery during the week ending May 29. That was down from the high-$18s range the prior week, per Canada LNG Group's weekly pricing update. European TTF natural gas settled at 48.93 EUR per MWh on June 3, a gain of 2.77% on that day, per TradingEconomics data. LNG flows through Hormuz represent roughly one-fifth of global trade, and any reopening would relieve both Asian and European spot premiums.