Shafaq News
Brent futures for June delivery were down more than $3 on
Tuesday following unconfirmed reports that Iran’s president said the country
was ready to end the war, assuming some guarantees were put into place.
The Brent May contract was on track for a record monthly
gain but it expires later on Tuesday, with liquidity dropping as investors
move their exposure to the more liquid June contract. Traded volumes for May
futures were 18,027 lots, some 26 times lower than June.
The Brent June contract was down $3.70 at $103.69 per
barrel, dropping after unconfirmed reports that Iranian President Masoud
Pezeshkian said, “We’re ready to end the war, but want guarantees.”
Brent crude futures for May were up $5.52, or 4.89%, at
$118.30 per barrel at 1:05 p.m. EDT (1705 GMT) , while U.S. crude futures were
down $2.17 or 2.11% at $100.71.
Front-month Brent futures were on track for a record gain of
64% in March, according to LSEG data dating back to June 1988. U.S. benchmark
West Texas Intermediate has gained 50% in the month, its biggest jump since May
2020.
“Once again the trap door under this market opened up
with the alleged statement from the Iranian president, if there is an immediate
end to hostilities then we know the Strait
(of Hormuz) can be reopened and supply will come back on to the market, taking
out a lot of the risk premium that has been built up in prices,” said John
Kilduff, Partner at Again Capital.
The international benchmark has steadily risen over the last
four weeks as the Iran war has escalated, with attacks across energy
infrastructure throughout the Gulf that have resulted in the worst-ever
oil-and-gas supply disruption.
OPEC’s oil output plunged in March by 7.3 million barrels
per day on a month-over-month basis to 21.57 million bpd, its lowest level
since the height of the COVID-19 pandemic in June 2020, a Reuters survey found,
amid forced export cuts.
The market has vacillated throughout the month, with a
series of dips each time U.S. President Donald Trump suggests the military
operation may be de-escalated – only to resume its upward path due to the
supply impairment caused by Iran’s threats against vessels transiting the key
Strait of Hormuz, the artery used to ship one-fifth of the world’s oil and gas.
“With crude now in triple digits, price action is being
driven less by new disruptions and more by expectations around intervention and
supply response timing,” analysts at energy consulting firm Gelber and
Associates said in a note.
Trump has suggested other countries should intervene to open
the strait, a move European nations have not wanted to take until hostilities
cease. The U.S. has removed sanctions on barrels from Russia and pledged
reserve releases with a group of other nations, but those measures will only offset the supply
loss for a limited period of time.
“With the oil market’s remaining buffers gradually
being consumed, the market’s vulnerability to a prolonged closure of (Hormuz)
means that we are moving closer to physical oil shortages across a wider
geographic scope, and the upward momentum for oil prices is likely to
strengthen further,” said Lin Ye, a vice president for commodities markets
and oil at Rystad Energy.
VOLATILE TRADE AS FRONT-MONTH EXPIRES
Trading on Tuesday was volatile, with front-month Brent
futures swinging in a range of up 5.7% to down 1.3% from Monday’s close.
U.S. Defense Secretary Pete Hegseth warned that if Iran did
not make a deal to end the war, the U.S. would continue the conflict with more
intensity, telling a briefing on Tuesday that the next few days could be
decisive.
The Islamic Revolutionary
Guard Corps hit back with a new threat, saying U.S. companies in the region
will be targeted as of Wednesday in retaliation for attacks on Iran, listing
Microsoft (MSFT.O), Google (GOOGL.O), Apple (AAPL.O), Intel (INTC.O), IBM
(IBM.N), Tesla (TSLA.O), and Boeing (BA.N), among 18 firms.
Trump, in a social media post on Truth Social, urged
countries that did not help the U.S. in its coordinated strikes against Iran
and are now unable to obtain jet fuel to buy American oil and go to the Strait
of Hormuz and “just TAKE it.”
The president issued the post a day after the Wall Street Journal reported that he
told aides he is willing to end the military campaign against Iran even if the
strait remains largely closed, leaving its reopening for a later date. Trump’s
approval ratings have declined as energy prices have increased, with the
average price of a gallon of gasoline nationwide surpassing $4 on Tuesday for
the first time since August 2022, according to AAA data.
Trump also previously warned that the U.S. would
“obliterate” Iran’s energy plants and oil wells unless Tehran reopened the waterway.
“While diplomatic signals remain mixed, the ground
reality suggests that uncertainty will persist,” said Sugandha Sachdeva,
the founder of SS WealthStreet, a New Delhi-based research firm.
“Even in the event of de-escalation, restoring damaged
infrastructure will take time, keeping supply tight.”
Kuwait Petroleum Corp on Tuesday said its fully loaded crude
oil tanker Al Salmi, capable of carrying up to 2 million barrels, was struck by
an Iranian attack at a Dubai port.
Officials also warned of the risk of oil spills in the area.
(Reuters)
Only the headline is edited by Shafaq News Agency.
