# Crude Spikes on Hormuz Mine Fears, EIA Shows 8M Draw 4 June 2026 ยท OILAV **$97 Brent breaks resistance as Iran mines Hormuz, EIA crude stocks plunge 8M barrels, and Iraq restarts 770K bpd through Ceyhan.** ## Key levels - Brent: support 94.5, resistance 100 - WTI: support 92, resistance 98.5 ## Price Action & Technicals > Crude has broken key technical resistance with conviction, targeting $100+ Brent on sustained geopolitical premium. **Brent crude surged 2.31% to $97.17** in the 5-day window, decisively breaking the $95-96 resistance zone that has capped rallies since April. **WTI outperformed with a 3.53% gain to $95.41**, erasing last week's Iran ceasefire optimism in spectacular fashion. **Heating oil led products higher with a 5.62% rally to $3.84**, signaling distillate tightness as European refiners struggle with Iranian supply disruptions. **The OVX volatility index held steady at $60.52**, suggesting options markets remain priced for continued Middle East escalation rather than mean reversion. **Volume in WTI futures spiked to 735K contracts**, the highest in three weeks, confirming institutional conviction behind the breakout. **Net speculative length at 115.7K contracts** provides room for additional momentum buying if supply fears intensify. ## Supply & Inventories > Inventory draws accelerating just as Middle East supply remains critically vulnerable to prolonged disruption. **EIA crude stocks crashed 8.0M barrels** for the week ending May 29, the largest draw in six months and double consensus expectations of 4M. **At 433.7M barrels, inventories sit 15M below the 5-year average** despite the ongoing SPR rebuild program. **US production held steady at 13.7M bpd** while **imports jumped to 6.4M bpd**, suggesting the draw reflects genuine demand strength rather than supply disruptions. **Iraq announced production restart at West Qurna 1, Majnoon and Fauqi fields**, targeting **770K bpd through the Ceyhan pipeline** after weeks of force majeure declarations. However, **Kuwait warned output won't recover for 10-12 weeks after Hormuz reopens**, highlighting the complexity of restarting production infrastructure damaged by naval mines. **Australian LNG strikes at Inpex's Ichthys facility** added further supply-side pressure to energy markets. ## Geopolitics & Disruptions > Hormuz mining represents a strategic escalation that could keep 20M bpd offline for months, not weeks. **Iran has begun mining operations in the Strait of Hormuz**, according to multiple intelligence sources, escalating the four-month conflict to a new level of supply threat. **Netanyahu told CNBC that Israel and the US are prepared to attack Iran again if necessary**, killing any remaining hopes for near-term de-escalation. **The EU proposed expanding its Aspides naval mission to lead mine-clearing efforts**, but such operations could take months to complete safely. **The US military is pursuing "quiet versions of Project Freedom"** to protect commercial shipping without the public fanfare that derailed Trump's original escort plan. However, **20% of global oil transit remains effectively blocked**, forcing **South Korea to triple Canadian crude imports** and triggering the largest energy supply chain restructuring since the 1970s oil shocks. ## Positioning & Flows > Positioning remains supportive for higher prices, with China's reserve selling the only major bearish flow. **Money managers hold 202.7K long positions against 87K shorts**, maintaining the highest net length since January despite recent volatility. **Open interest declined 36.4K contracts to 2.74M**, suggesting profit-taking by weak hands rather than genuine bearish conviction. **Chinese strategic petroleum reserve drawdowns** continue at unprecedented pace, with Beijing liquidating an estimated **1 billion barrels since February** to offset Iranian supply losses. **European refiners are scrambling for alternative crude sources**, driving **time spreads into steep backwardation** as prompt barrels command massive premiums. **The July-December WTI spread widened to $4.50** as traders price in extended Middle East disruptions rather than quick resolution scenarios favored by diplomatic optimists. ## Macro & Cross-Asset > Energy-driven inflation is forcing central banks to choose between growth and price stability, favoring commodity bulls. **The dollar index hit 118.87**, its highest level since 2022, yet crude continues rallying in defiance of typical negative correlation patterns. **10-year Treasury yields surged to 4.46%** as bond markets price in sustained inflation from energy costs, with **the Fed funds rate at 3.63% looking increasingly behind the curve**. **Britain's OBR warned of spiking government borrowing** due to energy shock impacts, while **Europe faces its worst energy crisis since the 2022 Russian gas cutoffs**. **Copper topped $14,000 per ton** as industrial metals benefit from supply chain reshuffling and infrastructure spending. **Goldman Sachs raised its end-2026 copper target**, citing the same supply security themes driving oil higher. **AI energy consumption concerns** are forcing tech giants to reassess data center expansion plans as power costs spiral. ## What to watch - Hormuz mine-clearing progress updates from EU Aspides mission - EIA weekly petroleum data Thursday 10:30 ET for confirmation of draw trend - Iraq Ceyhan pipeline restart timeline and flow rate verification - OPEC+ emergency meeting speculation if Brent hits $100 - Chinese SPR selling pace amid reserve depletion concerns ## Risks to the view - Hormuz escalation to full blockade (possible) - Chinese strategic reserve exhaustion forcing demand rationing (likely) - Fed emergency rate hike on energy inflation (tail risk) ## Outlook **Brent targets $100-105 over the next 2-3 weeks** as Hormuz mining operations prove more disruptive than initial market assumptions. **The combination of accelerating inventory draws and prolonged Middle East supply outages** creates the tightest oil market since 2008, with downside risks limited to Chinese demand destruction.