Trump Iran reprieve oil news drove crude sharply lower on Monday, as traders reacted to President Trump’s decision to delay a new round of strikes against Iran.
Prices fell from Sunday evening’s Globex open through Monday’s U.S. settlement. Crude opened with a gap lower and then stayed weak for most of the session. However, Iranian officials rejected the idea that active direct talks with Washington were under way.
Trump cancelled the planned attack over the weekend after requests from Iran and other Middle Eastern governments. He said a deal needed to be reached quickly. Meanwhile, Iranian officials said talks with Oman on the Strait of Hormuz were separate and not tied to any third party.
They also said unresolved issues with the United States would be handled later. In addition, Iran said it had no plan to host a U.S. delegation or send negotiators abroad in the next few days.
Trump Iran Reprieve Oil Hits Crude
Later in the session, Trump said talks were aimed at fully reopening the Strait of Hormuz within a day. He added that a later phase would address Iran’s denuclearisation. However, the market reaction to those remarks was brief and did not change the wider move.
By settlement, WTI traded in a range from the high $70s to the low $80s a barrel. Brent traded from the low $80s to the mid $80s. Therefore, the day’s price action pointed to relief over the delayed strikes.
OPEC+ Hike Meets Shipping Limits
The weekend OPEC+ decision had only a limited effect on the market. The group approved a September quota increase of close to 190,000 barrels a day. However, the added supply still faced the same shipping limits as current exports.
Kpler data showed traffic through the Bab al-Mandeb Strait eased from Saturday into Sunday. Bloomberg estimated that about 5 million barrels a day moved through the Strait of Hormuz without transponder signals. Meanwhile, six Saudi-flagged supertankers rerouted around southern Africa in recent days because of threats from Yemen’s Houthi movement.
At the same time, two tankers carrying Saudi crude crossed the Bab el-Mandeb Strait over the weekend. Traffic through Hormuz also slowed after reports of vessel attacks. As a result, the OPEC+ increase appeared less important than the risks to physical oil flows.
Elsewhere, Kuwait’s July crude output rose to close to 2 million barrels a day, its highest since the Middle East conflict began. Kazakhstan’s output fell to about 1.85 million barrels a day amid disruptions to CPC export flows, while trader estimates showed Russia’s seaborne crude exports from western ports were expected to rise about 4% in August from July.
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Source: InvestingLive
