Brent Swings $40 in a Week as Hormuz Disruption Traps 13 mb/d and the IEA Burns Through Strategic Reserves

Oil dropped 10.5% on Trump's postponed strikes, then rebounded as record SPR withdrawals and Citi's $120 target exposed the gap between diplomacy and physical supply. Oil prices plunged 10.5% after President Trump postponed strikes on Iran's power plants for five days, describing talks as "very good and productive." ICE Brent crude front-month tumbled nearly 8% to close at $101.27 in a single session after Trump told reporters that negotiations were in their "final stages." NYMEX WTI front-month fell about 7% to $95.08. The moves came after Brent had traded as high as $111 at a five-month peak and as low as $65 on de-escalation signals. The Strait of Hormuz disruption risk is the supply factor that makes each diplomatic signal worth billions of dollars of market value. The chokepoint previously handled a fifth of global oil flows. Roughly 13 million barrels per day of disrupted supply is being "largely offset by inventory, which is clearly declining rapidly," according to analysis cited by CNBC. The offset is a countdown, not a solution. The US drew nearly 10 million barrels from its Strategic Petroleum Reserve in a single week, the largest weekly withdrawal ever recorded. All 32 IEA members agreed to release 400 million barrels from strategic stocks. IEA chief Fatih Birol noted the release added 2.5 million bpd to the market but emphasised the agency retained 80% of reserves. "Four hundred million barrels is only 20% of our resource," Birol said at the G7 finance ministers meeting. The language was reassuring by design. That it needed saying was not. Iran's semi-official Tasnim news agency reported that Americans had accepted in a new negotiating text to waive Iran's oil sanctions. Trump separately said the US would not "rush" into a deal, stressing negotiations remain ongoing and that both sides need time to "get it right." The contradiction between the sanctions waiver report and the "won't rush" statement produced $6 swings within hours. Analyst forecasts span an extraordinary range. Citi expects ICE Brent crude front-month to rise to $120 in the near term, arguing markets are underpricing prolonged supply disruption. Wood Mackenzie estimated prices could approach $200 if the Hormuz closure persists. Goldman Sachs raised its fourth-quarter Brent forecast to $90 and WTI to $83. The spread between Goldman's $90 and Citi's $120 captures the market's fundamental uncertainty: everything depends on whether the strait reopens. PVM analysts warned that global oil stocks could reach critically low levels. "Yet, as observed lately, market players are comparatively nonchalant — or complacent — about what the conflict might bring," PVM said. The EIA confirmed a crude inventory build of 4 million barrels during the week ending May 9, providing a brief counterweight to the drawdown narrative. On decentralised trading platforms, the reaction was blunt. WTI and Brent crude prices on Hyperliquid crashed after Trump's deal signals, with AI-driven sentiment scoring 18 out of 100. The trading thesis was simple: buy the news that Hormuz reopens, sell the risk premium. But the premium keeps rebuilding because the strait keeps not reopening. Brent briefly recovered to $105.83, up 81 cents, before falling again. WTI bounced to $99.23 on the same session. The pattern has repeated for weeks: deal optimism pushes prices down, physical reality pulls them back up. Each cycle leaves the market slightly lower on hope and slightly higher on structural deficit. The signal to watch is whether the mine-clearing operation for the Hormuz strait receives a formal green light. Britain's RFA Lyme Bay is loading ammunition and mine-hunting drones at Gibraltar, preparing for a multinational reopening effort. But the operation begins only after hostilities formally end. Until then, 13 mb/d stays trapped and SPR drawdowns remain the only buffer between current prices and Citi's $120 call.