US-Iran tensions flare despite ceasefire agreement
June 29, 2026
Oil prices are up this morning after more flare ups over the weekend sparked investors to put more of a risk premium into the market.
Both the US and Iran have said they would stand down for now and allow vessels to move freely in the strait after a weekend tit-for-tat attacks. An Iranian projectile hit a cargo vessel in the Strait of Hormuz on Thursday, with both the US and Iran accusing the other of breaking the interim ceasefire.
Russian President Putin acknowledged that Russia continues to face fuel supply shortages as Ukrainian drone attacks on Russian refineries persist. Among the measures reportly under consideration is a full ban on diesel exports which will continue to tighten global distillate markets.
The counter to some of this is that Middle East production has come back much stronger and quicker than many estimates. Reports indicate the regional production is 15 million bpd, Kuwait has lifted force majeure and is tendering July cargoes, and Saudi Arabia is running record volumes through Yanbu.
Rystad Energy now sees pre-war volumes back by year-end, three months sooner than its prior call, with Iran ramping towards 3.1 million bpd by August if the US waiver holds.