Iran Fires Ballistic Missile at Kuwait and Five Drones Near Hormuz; Brent Rebounds 1.7% to $95.86

Iran's Islamic Revolutionary Guard Corps fired a ballistic missile at Kuwait late Wednesday and launched five attack drones in and near the Strait of Hormuz. Kuwaiti air defenses intercepted the missile at approximately 10:17 p.m. ET. U.S. Central Command shot down four of the five drones and struck an IRGC control station in Bandar Abbas, destroying the fifth drone on the ground. CENTCOM called the Kuwait missile launch "an egregious ceasefire violation," per CBS News and CNN live coverage.

Brent crude futures rose to $95.86 per barrel on ICE in early Thursday trading, up 1.66% from Wednesday's close, according to TradingEconomics data as of May 28, 2026. WTI front-month futures climbed to $90.87 per barrel on the CME, a gain of 2.47%, per TradingEconomics. Both moves reversed a Wednesday selloff that had pushed WTI to a five-week low.

Ceasefire Under Challenge

The Hormuz crisis began February 28, 2026, when U.S. and Israeli forces conducted Operation Epic Fury, killing Iran's Supreme Leader Khamenei. Iran declared the strait "closed" on March 4, 2026. Gulf Arab producers collectively cut output by approximately 10 million barrels per day at the disruption's peak, per IEA data. Iraq's southern production fell from 4.3 million barrels per day to 1.3 million; Saudi Aramco's parent kingdom cut from roughly 10 million to 8 million barrels per day.

As recently as May 23, President Trump described a proposed accord as "largely negotiated." Axios reported on May 24 a proposed 60-day memorandum under which Iran would clear mines and reopen the strait in exchange for a U.S. port blockade lift and sanctions waivers. Iranian Foreign Ministry spokesman Esmail Baghaei said viewpoints had been "getting closer" but that deal text was not finalized. Wednesday night's escalation reversed that trajectory.

Brent peaked at $126 per barrel in March 2026. Dubai crude hit $166 per barrel on March 19, a record level, per IEA data. Oil Authority reported Wednesday that vessels were transiting the strait with AIS transponders disabled, a sign the passage was tentatively reopening and that pushed Brent toward $94. Thursday's IRGC strikes mark the sharpest single-session reversal since ceasefire negotiations began.

What Happened Overnight

Iran's navy simultaneously forced two vessels to stop in the Strait and turned back two others Wednesday night, per CBS News live coverage. The IRGC reported 26 vessels passed through the Strait under Iranian control in the prior 24 hours. Iran's Persian Gulf Strait Authority, established May 5, 2026, continues to levy transit tolls assessed in Chinese yuan. Lloyd's List Intelligence reports that Iranian-linked vessels now comprise 50% of recent Persian Gulf traffic.

President Trump, speaking from Camp David, said he would not agree to a "crummy agreement." He warned Oman, a key intermediary in the talks, to "behave just like everybody else." The ceasefire remains technically in force, but both governments now accuse the other of violations. Brent's $94.29 Wednesday close and today's $95.86 reflect the single-session price swing driven by those overnight events.

Supply Deficit and Price Context

The IEA's May 2026 Oil Market Report, published May 13, found global oil supply fell 1.8 million barrels per day in April to 95.1 million barrels per day. Total losses since the crisis began in February now stand at 12.8 million barrels per day. Gulf countries are producing 14.4 million barrels per day below pre-crisis levels, the agency said.

Brent's $1.57 per barrel Thursday gain, applied to the IEA's April supply baseline of 95.1 million barrels per day, represents a $149 million per day shift in producer revenues compared with Wednesday's close, per Oil Authority calculation using IEA May 2026 data. Each additional $1 per barrel sustained move at that supply level shifts roughly $95 million per day in global producer revenues. The IEA's 32 member states released 400 million barrels from strategic reserves in March, equal to four days of pre-crisis global consumption.

U.S. crude stocks continued to draw down despite that reserve release, falling 51.6 million barrels from 870.8 million on April 17 to 819.2 million on May 15, per EIA weekly historical data. The American Petroleum Institute's preliminary survey showed crude inventories fell 2.8 million barrels in the week ending May 22, per OilPrice.com. The EIA's confirmed weekly inventory figure, delayed from Wednesday to Thursday due to the May 25 Memorial Day federal holiday, is due at 12:00 p.m. ET today.

The IEA forecast global oil demand to contract 420,000 barrels per day year-on-year in 2026, with the sharpest quarterly decline of 2.45 million barrels per day expected in Q2. The EIA's May Short-Term Energy Outlook revised full-year 2026 global demand growth to 0.2 million barrels per day, down from 0.6 million barrels per day in its prior forecast. The 12.8 million barrel per day supply gap is 30 times larger than the demand contraction, keeping structural upward pressure on prices despite the pullback from March peaks.