| Commoditiy | Price | Weekly Change | 50day-Ave | 100day-Ave | 200day-Ave |
|---|---|---|---|---|---|
| Brent ($/b) | 101.87 | -7.90 | 87.91 | 75.52 | 71.09 |
| US WTI ($/b) | 103.58 | -8.83 | 83.38 | 71.18 | 67.24 |
| ICE Gasoil ($/MT) | 1,252.00 | -268.25 | 1,030.31 | 842.67 | 772.02 |
| Jet CIF NWE ($/MT) | 1,527.23 | -127.44 | 1,191.28 | 945.37 | 836.16 |
The talks between Iran and the US failed over the weekend and Trump has threatened a blockade on ships transiting the Strait of Hormuz. Oil markets have opened higher this morning with Brent trading over 100 \$/b again. The talks have been covered extensively in the press, but the key sticking point for the US remains and according to JD Vance, is a need for a commitment that Iran would “not seek a nuclear weapon, and they will not seek the tools that would enable them to quickly achieve ?a nuclear weapon.” Despite it appearing the talks have fallen apart Iran has said that “no one had expectation of reaching agreement with US in one session” suggesting further talks might be in the offing. The other positive is that so far, the ceasefire is holding, with the exclusion of Israel and Lebanon, the US is not attacking Iran and Iran is not attacking its neighbours. While Trump has threatened a blockade, he has not renewed threats to attack Iranian energy infrastructure. The market is higher today on the headlines of the initial talks falling apart, but perhaps it got ahead of itself last week.
The threat of the US blockage appears to be a significant development although this is tempered by the fact that limited traffic has been going through the Strait. What has been going through has been mainly with Iranian approval, especially Iranian crude. The blockade which is due to come into force at 1500 London time today, will only affect shipping to and from Iranian ports and so seems aimed at undermining Iranian attempts to control the Strait and earn tolls from vessels passing through. We have already seen a number of ships abandoning efforts to transit the Strait. Saudi Arabia’s East-West pipeline, a key route to export oil via the Red Sea that would usually exit the Persian Gulf was partially damaged last week. The damage appears not to have been critical, and flows have been restored again already.
The outlook for energy markets remains very difficult, the market was perhaps too optimistic last week. The US blockade has the effect of increasing the pressure on Iran without restarting the conflict, but what we need to see is a date for another round of talks agreed. The supply situation in local markets is getting worse, so there is a very limited window for making progress on talks and if we don’t see another date for talks being put in the dairy soon, this week, we could see markets testing higher again.
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