| Commoditiy | Price | Weekly Change | 50day-Ave | 100day-Ave | 200day-Ave |
|---|---|---|---|---|---|
| Brent ($/b) | 84.02 | -4.34 | 85.05 | 94.93 | 81.13 |
| US WTI ($/b) | 79.96 | -2.65 | 81.84 | 90.26 | 76.17 |
| ICE Gasoil ($/MT) | 1,235.75 | 2.75 | 1,058.63 | 1,154.07 | 939.08 |
| Jet CIF NWE ($/MT) | 1,241.82 | -14.00 | 1,112.22 | 1,274.36 | 1,031.21 |
Oil markets are down today, Brent under 84 \$/b, after Trump has declared another ceasefire. In some ways this feels like deja-vu, where the market has reacted to the news over the weekend that Trump was holding off from further attacks because of the talks with Iran going well. After the news last week Brent reached a low of 82.50 \$/b, but the market climbed back to highs close to 89 \$/b after military action started again and talks between Oman and Iran on future arrangements for the Strait of Hormuz did not reach a conclusion. With the sell off in the market again this morning the market faces the same question, will the talks make progress this week or will hostilities resume.
One interesting development in the conflict last week was the joint Saudi-US operation last week. Saudi Arabia has generally tried to keep out of this war so its coordinated strike on Iranian backed militias in Iraq following the drone strikes on Saudi Arabia, was a significant development. After the Houthi’s disruption to Saudi cargoes in the Red Sea and Houthi attacks on Saudi Arabia itself, they had presumably decided enough was enough. One possible interpretation of this action might be that with Iran now in such a weakened state, there is an opportunely to deal with its proxies. This would be consistent with the announcement last week that Hamas has agreed to disarm and put pressure on the Lebanese government to assert itself in pushing out Hezbollah. This could cause more disruption in the short term though and it could be that Trump does not have the patience for this. Another explanation is that the Saudi action sends a warning to Iran that it risks direct action by other Gulf states if it carries on as it is.
The talks between Iran and Oman appear to be the main hope for reopening the Strait of Hormuz. According to some sources, Oman was proposing that ships could have the choice of a northern transit route in Iranian waters or a Southern one in Omani waters with fees being paid depending on which on they choose. Iran was apparently unhappy with this, suspecting that everyone would choose the Omani route, and they would get no revenue and instead proposed that ships would need to go in though one route and out through another, thus ensuring both countries get fees. Aside from this, Trump is now saying a deal for the Strait of Hormuz is now imminent and said that talks will take place this afternoon. If they are not successful, we may have another rerun of last week and the week before.
If there is no agreement allowing shipping through the Strait of Hormuz once again it is difficult to see prices continuing to decline from the current levels, and indeed could rally higher again, perhaps to around 90 \$/b where Brent closed on Friday. If there is some progress, Brent could fall back towards 80 \$/b.
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