The little-known 26year-old from Southend, playing in his first ATP Tour main draw, won two tie-breaks to beat last month's French Open runner-up 7-6(4) 7-6(2).
It was only the seventh time the top seed has lost an opening-round match at Queen's in the open era.
Peniston consigned world No.5 Ruud to an illustrious list featuring Andy Murray plus US pair Pete Sampras and Jimmy Connors.
He said: "I can't really believe it, it feels like a dream. I didn't get much sleep last night, it doesn't feel real.
This story is from the June 15, 2022 edition of Daily Record.
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This story is from the June 15, 2022 edition of Daily Record.
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