Oil Falls, US-Iran Talks Discussed
Oil prices weakened on Tuesday (April 14) after signs emerged that Washington and Tehran were open to further negotiations, reducing some of the risk premium despite the ongoing US blockade of the Strait of Hormuz. Brent fell below US$99/barrel, while WTI hovered around US$98/barrel.
Sources familiar with the discussions said the two sides were discussing a new round of face-to-face negotiations for a long-term ceasefire. The goal is to hold it before the two-week pause in hostilities announced on April 7 ends. US President Donald Trump said Iran is "in touch" and "wants to make a deal," while Iranian President Masoud Pezeshkian stated that Tehran is ready to resume peace talks within the framework of international law.
However, the market remains concerned about supply risks. The US-Israel-Iran conflict, now in its seventh week, has triggered supply shocks as energy infrastructure has been impacted and the Hormuz Strait has been disrupted. The US has increased pressure by blocking ships from entering or leaving Iranian ports and coastal areas in the Persian Gulf, adding to the uncertainty surrounding physical flows.
On the operational front, tracking data showed a US-sanctioned tanker linked to China, the Rich Starry, passing through the strait on Tuesday, a test of the new US stance. However, it was unclear whether the ship called at an Iranian port or was carrying cargo. Meanwhile, the Wall Street Journal reported that Saudi Arabia was pushing the US to end the blockade and return to negotiations, amid concerns that Trump's move could trigger Iran to disrupt other vital shipping routes.
Analysts said hopes for talks would limit the rise in headline futures, but physical market pressures remained tight as long as the Hormuz flow remained constrained. Robert Rennie (Westpac) said diplomatic signals could keep Brent and WTI around or below US$100, but the underlying supply squeeze remained intense, potentially keeping real fuel prices under pressure. In the US, retail gasoline and diesel prices were said to have risen to their highest levels since 2022, while jet fuel and diesel prices in Europe surged to or near record levels above US$200/barrel.
US Vice President JD Vance acknowledged that rising gasoline prices were hurting US consumers, but said the blockade increased Washington's leverage in negotiations and said the US "could start to lower the intensity." Ship traffic through Hormuz fell again on Monday after rising on Sunday, although three tankers were recorded as having successfully passed. The market awaits the release of the IEA Oil Market Report and the IMF's updated projections, which are expected to lower the outlook due to the war, as a new reading of the impact on supply and demand and global growth.
5 Key Points:
- Oil weakens: Brent <US$99, WTI -US$98 amid hopes for US-Iran talks.
- The US and Iran are said to be discussing new negotiations before the two-week ceasefire (April 7) ends.
- The US blockade of shipping to and from Iranian ports maintains supply risks and uncertainty in Hormuz.
- Physical pressures remain: US gasoline/diesel prices highest since 2022; European diesel/jet fuel >US$200/barrel.
- The market awaits the IEA OMR and revised IMF projections for clues on the impact on supply and production. (asd)
Source: Newsmaker.id
