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Oil Prices Firm Above US$100 With No End to the Iran War in Sight

Oil prices firmed above US$100 per barrel early on Monday, rising for a fourth-straight session as hopes for a coming end to the Iran war and a reopening of the Strait of Hormuz fade, while a report showed an unexpected drop in U.S. oil inventories.West Texas Intermediate (WTI) crude oil for June delivery was last seen up US$3.35 to US$103.28 per barrel, the highest since April 7, while June Brent oil was up US$3.45 to US$114.71.WTI has climbed about 49% since the war began on Feb. 28, when Iran blocked the Strait of Hormuz, a key chokepoint for roughly 20% of global oil supply, following attacks by the United States and Israel. The United States is now blockading Iranian ports and Iran has demanded that be lifted before peace talks can resume, which the U.S. is refusing to do, continuing the largest-ever supply shock."The near closure of the Strait of Hormuz prolongs a disruption that continues to tighten global energy markets ... Traders now focus on the next steps in peace talks and today's US inventory report for further signs of how quickly US stockpiles are falling amid robust export demand," Saxo Bank wrote.In its weekly survey, the American Petroleum Institute reported U.S. oil stocks fell by 1.79-million barrels last week, while the consensus estimate expected a rise of 0.3-million barrels, according to Investing.com.The oil market is also focusing on the Tuesday decision by the United Arab Emirates to withdraw from the OPEC Cartel. The UAE is OPEC's third-largest producer and the No. 7 global oil exporter. The decision is likely to have a near-term effect, given the supply shock, but could add additional supply to the market once the conflict ends."Given the world is currently suffering from a lack of supply due to the closure of the Strait of Hormuz, the UAE's departure doesn't really matter since it is already producing at its maximum capacity. That is the maximum it can export via its pipeline (1.5-1.8 mb/d) to the Gulf of Oman given the closure of the Strait, which is why the UAE's overall output fell to 2.37 mb/d in March (vs. 3.64 mb/d in February). In the longer run, when hopefully the conflict is resolved, it may matter more as the UAE could supply the global oil market with an additional 1.0 mb/d. Moreover, OPEC/OPEC+ is losing one of its most vital members," Art Woo, a senior economist at BMO Capital Markets, wrote.

Brent Crude Up 3.15% at Near US$114.75

Update: WTI Rises as Progress on Ending the Iran War Stalls; the UAE Ends Its OPEC Membership

(Updates prices and adds UAE's Withdrawal from OPEC in the final two paragraphs.)West Texas Intermediate (WTI) closed higher on Tuesday, with the U.S. benchmark price flirting with the US$100 per barrel for the first time in three weeks as hopes for an end to the war on Iran fade and the Strait of Hormuz remains closed.WTI crude oil for June delivery closed up US$3.56 to settle at US$99.93 per barrel as it failed to hold the US$100 mark it topped during the session, while June Brent oil was last seen up US$2.58 to US$110.81.Weekend talks expected to be held in Pakistan between Iran and the United States failed to take place, while a Monday proposal from Iran to reopen the Strait of Hormuz in return for lifting a U.S. blockade of its ports and deferring talks over its nuclear program was rejected by President Trump.Iran closed the Strait of Hormuz after the United States and Israel launched attacks on the country on Feb. 28. The Strait is the chokepoint for 20% of daily global oil demand supplied by Persian Gulf nations and its closure has produced the largest-ever supply shock, pushing up oil prices by 49% since the start of the war."Oil extended its rally ... amid no signs of progress toward reopening the Strait of Hormuz, where US and Iranian blockades have reduced daily transits to near zero. Warnings over the severity of the global supply squeeze continue to intensify, with tightness in refined fuel markets already pushing diesel and jet fuel prices toward USD 200 per barrel," Saxo Bank noted.The closure of the Strait has pushed up spot price for oil, as the Asian nations that rely on Gulf producers compete for available barrels. Rising prices have heightened inflation and raises the risk of a global recession as the lack of supply forces demand destruction and chokes off economic growth."Alarm bells will ring loudly if the SoH (Strait of Hormuz) doesn't reopen during May. Spot crude and product prices will trade higher and higher. And if a decent reopening doesn't take place before June/July, then the risk is significant for a real crisis where the world may be forced to reduce its oil consumption closer to the level of availability," Bjarne Schieldrop, chief analyst commodities at SEB Research, wrote.Also on Tuesday, the United Arab Emirates, the No.3 OPEC producer and the No.7 global oil exporter, said it will withdraw from OPEC on May 1, freeing itself from the cartel's quota system that restricted its output well below its production capacity."We reaffirm our appreciation for the efforts of both OPEC and the OPEC+ alliance and wish them success. During our time in the organisation, we made significant contributions and even greater sacrifices for the benefit of all. However, the time has come to focus our efforts on what our national interest dictates and our commitment to our investors, customers, partners and global energy markets," the country's government said in a release.

April WTI Crude Oil Contract Closes Up US$3.56; Settles at US$99.93 per Barrel

Market Chatter: United Arab Emirates Says It Will Leave OPEC Effective May 1

The United Arab Emirates announced Tuesday that it will leave the oil cartel OPEC and its wider OPEC+ group effective May 1, a move rumored for some time as the Emirates chaffed under production restrictions and increasingly had frostier relations with neighboring Saudi Arabia, The Associated Press is reporting.The UAE had been a longtime member of OPEC, first through its emirate of Abu Dhabi in 1967 and later when the UAE became its own country in 1971, the report notes.But the UAE has been increasingly trying to leverage its own foreign policy in the Middle East that has contradicted some positions of Riyadh over time -- particularly as Saudi Arabia began to directly challenge the Emirates in trying to draw foreign investments as the kingdom opened up under assertive Crown Prince Mohammed bin Salman, the report says.The UAE made the announcement via its state-run WAM news agency. "This decision reflects the UAE's long-term strategic and economic vision and evolving energy profile, including accelerated investment in domestic energy production, and reinforces its commitment to a responsible, reliable, and forward-looking role in global energy markets," the UAE said."Following its exit, the UAE will continue to act responsibly, bringing additional production to market in a gradual and measured manner, aligned with demand and market conditions," it added.(Market Chatter news is derived from conversations with market professionals globally, and/or from other media sources. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)

United Arab Emirates Says It Will Leave OPEC Effective May 1 ,The Associated Press is reporting

Oil Prices Jump as Progress on Ending the Iran War Stalls

Oil prices were sharply higher early on Tuesday, with the U.S. benchmark price rising back above US$100 per barrel for the first time in three weeks as hopes for an end to the war on Iran fade and the Strait of Hormuz remains closed.West Texas Intermediate crude oil for June delivery was last seen up US$4.94 to US$101.31 per barrel, the highest since April 7, while June Brent oil was up US$3.66 to US$111.89.Weekend talks expected to be held in Pakistan between Iran and the United States failed to take place, while a Monday proposal from Iran to reopen the Strait of Hormuz in return for lifting a U.S. blockade of its ports and deferring talks over its nuclear program was rejected by President Trump.Iran closed the Strait of Hormuz after the United States and Israel launched attacks on the country on Feb. 28. The Strait is the chokepoint for 20% of daily global oil demand supplied by Persian Gulf nations and its closure has produced the largest-ever supply shock, pushing up oil prices by 44% since the start of the war."Oil extended its rally ... amid no signs of progress toward reopening the Strait of Hormuz, where US and Iranian blockades have reduced daily transits to near zero. Warnings over the severity of the global supply squeeze continue to intensify, with tightness in refined fuel markets already pushing diesel and jet fuel prices toward USD 200 per barrel," Saxo Bank noted.The closure of the Strait has pushed up spot price for oil, as the Asian nations that rely on Gulf producers compete for available barrels. Rising prices have heightened inflation and raises the risk of a global recession as the lack of supply forces demand destruction and chokes off economic growth."Alarm bells will ring loudly if the SoH (Strait of Hormuz) doesn't reopen during May. Spot crude and product prices will trade higher and higher. And if a decent reopening doesn't take place before June/July, then the risk is significant for a real crisis where the world may be forced to reduce its oil consumption closer to the level of availability," Bjarne Schieldrop, Chief analyst commodities at SEB Research, wrote.

Brent Crude Up 3.1% at US$111.55 and NY Crude Up 3.6% at Near US$99.90

Update: WTI Oil Rises as Expected Talks Between Iran and the U.S. Fail to Take Place

West Texas Intermediate (WTI) crude oil closed higher Monday as talks expected to be held over the weekend between the United States and Iran in Pakistan didn't happen, even as Iran offered to reopen the Strait of Hormuz in return for it being allowed to continue its nuclear program and the U.S. ending the blockade of its ports.WTI oil for June delivery closed up US$1.97 to settle at US$96.37 per barrel, while June Brent oil was last seen up US$3.13 to US$108.46.Iran closed the Strait of Hormuz after the United States and Israel launched attacks on the country on Feb. 28. The Strait is the chokepoint for 20% of daily global oil demand supplied by Persian Gulf nations and its closure has produced the largest-ever supply shock, pushing up oil prices by 41% since the start of the war.Talks expected to be staged in Islamabad over the weekend were cancelled as negotiators failed to turn up, though a ceasefire held as the war enters its third month."With face to face negotiations failing to materialize in Islamabad despite the market hour headlines pointing to progress in the talks, it seems that neither side feels sufficient pressure to make serious concessions. For eight weeks, the White House has been exceedingly successful in deploying the "over soon" message to keep a lid on front month prices," Helima Croft, Head of Global Commodity Strategy and MENA Research at RBC Capital Markets, wrote.The Guardian on Monday reported Iran is offering to end its chokehold on the Strait in return for an end to the U.S. blockade, and without addressing concerns around its nuclear program, which U.S. President Trump has made a key demand for ending the war. The paper said the proposal was passed to the United States by Pakistan.

June WTI Crude Oil Contract Closes Up US$1.97; Settles at US$96.37 per Barrel

Oil Prices Rise as Expected Talks Between Iran and the U.S. Fail to Take Place

Oil prices rose early Monday as talks expected to be held over the weekend between the United States and Iran in Pakistan didn't happen. But prices eased off overnight highs as Iran offered to reopen the Strait of Hormuz in return for it being allowed to continue its nuclear program and the U.S. ending the blockade of its ports.West Texas Intermediate crude oil for June delivery was last seen up $1.36 to US$95.76 per barrel, after earlier touching US$97.10, while June Brent oil was up US$1.44 to US$106.77.Iran closed the Strait of Hormuz after the United States and Israel launched attacks on the country on Feb. 28. The Strait is the chokepoint for 20% of daily global oil demand supplied by Persian Gulf nations and its closure has produced the largest-ever supply shock, pushing up oil prices by 41% since the start of the war.Talks expected to be staged in Islamabad over the weekend were cancelled as negotiators failed to turn up, though a ceasefire held as the war enters its third month."With face to face negotiations failing to materialize in Islamabad despite the market hour headlines pointing to progress in the talks, it seems that neither side feels sufficient pressure to make serious concessions. For eight weeks, the White House has been exceedingly successful in deploying the "over soon" message to keep a lid on front month prices," Helima Croft, Head of Global Commodity Strategy and MENA Research at RBC Capital Markets, wrote.The Guardian on Monday reported Iran is offering to end its chokehold on the Strait in return for an end to the U.S. blockade, and without addressing concerns around its nuclear program, which U.S. President Trump has made a key demand for ending the war. The paper said the proposal was passed to the United States by Pakistan.

NY Crude Now Up 0.7% at Just Over US$95, Was Near US$96.30; Brent Crude Now Up 1% at US$106.36, Was Near US$107.60

NY Crude Up 2% at Near US$96.30 and Brent Crude Up 2.2% at Near US$107.60

Brent Crude Up 2.4% at Near US$107.90 As US-Iran Peace Talks Stall

Update: WTI Oil Falls as a Report Says Peace Talks Between the U.S. and Iran May Resume

West Texas Intermediate (WTI) crude oil fell on Friday following a report that said Pakistani officials expect another round of talks between the United States and Iran.WTI crude oil for June delivery closed down US$1.45 to settle at US$94.40 per barrel, while June Brent oil was last seen up US$0.15 to US$105.22.Bloomberg News reported Iranian Foreign Minister Abbas Araghchi and a team of negotiators are expected to arrive in Islamabad late on Friday for talks with a U.S. delegation already in place. The Wall Street Journal said U.S negotiators Steve Witkoff and Jared Kushner will travel the Pakistan capital for the talks that could re-open the Strait of Hormuz.The Strait is the chokepoint for exports from Persian Gulf nations, which supplied 20% of daily oil demand prior to the Feb. 28 start to the war, which also trapped shipments of of diesel and jet fuel, as well as petrochemical feedstocks and fertilizers."What began as a crude oil supply shock linked to the effective closure of the Strait of Hormuz has now broadened into a multi-commodity disruption. The implications are no longer confined to energy markets alone but are spreading into industrial production, transportation, and ultimately agriculture and food price," Ole Hansen, head of commodity strategy at Saxo Bank, wrote.Still, a quick end to the war is unlikely to produce a quick end the largest-ever energy supply shock. The U.S. Pentagon on Thursday warned it may take six months to clear mines laid in the Strait, the Washington Post reported on Thursday."That is a completely different timescale from what the financial market is pricing. Even a political deal tomorrow does not immediately reopen the strait," Ole Hvalbye, a commodities analyst at SEB Research, wrote.

June WTI Crude Oil Contract Closes Down US$1.45; Settles at US$94.40 per Barrel

Oil Prices Fall as a Report Says Peace Talks Between the U.S. and Iran May Resume

Oil prices fell early on Friday following a report that said Pakistani officials expect another round of talks between the United States and Iran.West Texas Intermediate crude oil for May delivery was last seen down US$1.07 to US$94.78 per barrel, while May Brent oil fell US$0.42 to US$104.65.Bloomberg News reported Iranian Foreign Minister Abbas Araghchi and a team of negotiators are expected to arrive in Islamabad late on Friday for talks with a U.S. delegation already in place. The report sent prices down from overnight highs on hopes a potential deal that would reopen the blocked Strait of Hormuz.The Strait is the chokepoint for exports from Persian Gulf nations, which supplied 20% of daily oil demand prior to the Feb. 28 start to the war, which also trapped shipments of of diesel and jet fuel, as well as petrochemical feedstocks and fertilizers."What began as a crude oil supply shock linked to the effective closure of the Strait of Hormuz has now broadened into a multi-commodity disruption. The implications are no longer confined to energy markets alone but are spreading into industrial production, transportation, and ultimately agriculture and food price," Ole Hansen, head of commodity strategy at Saxo Bank, wrote.Still, a quick end to the war is unlikely to produce a quick end the largest-ever energy supply shock. The U.S. Pentagon on Thursday warned it may take six months to clear mines laid in the Strait, the Washington Post reported on Thursday."That is a completely different timescale from what the financial market is pricing. Even a political deal tomorrow does not immediately reopen the strait," Ole Hvalbye, a commodities analyst at SEB Research, wrote.

Brent Crude Now Down 1.5% at Near US$103.50 and NY Crude Down Near 2.2% at Near US$93.80 As Pakistan Officials Say Second Round of U.S. and Iran Talks Expected

Brent Crude Up 2.1% at Near US$107.30 and NY Crude Up 1.9% at US$97.65

Update: WTI Oil Closes Higher as the Prospects for a Peace Deal in the Iran War Stall

West Texas Intermediate (WTI) crude oil closed highe on Thursday with the United States and Iran making little progress to end a war that has produced the largest-ever supply shock with shipments from the Persian Gulf region barred from the Strait of Hormuz.WTI crude oil for June delivery closed up US$2.89 to settle at US$95.85 per barrel, while June Brent oil was last seen up US$3.07 to US$104.98.The United States and Iran remain at an impasse, with Iran refusing to negotiate as long as the U.S. Navy continues to blockade its ports, while the U.S. refuses to lift the blockade. Iran is attacking ships in the Strait of Hormuz, the chokepoint for 20% of the world's daily oil demand supplied by Persian Gulf nations, while reports say U.S. forces are boarding Iranian ships in the Indian Ocean."The Iranian leadership had made the lifting of the US blockade a precondition for the resumption of negotiations, with a senior official calling it an act of military aggression. President Trump for his part has indicated that the ceasefire will remain in place for now, leaving the conflict in a no airstrike, minimal movement of ships, unsustainable equilibrium," Helima Croft, Head of Global Commodity Strategy and MENA Research wrote.WTI oil is up 43% since the Feb. 28 start to the war, but has retreated below the four-year high of US$112.95 touched on April 7 on hopes for a coming end to the conflict. However should traders expect the current impasse between the two sides to stretch out, prices could retest that four-year high."Trump has been touting that a deal with Iran is imminent through most of April. But a deal now looks increasingly elusive. Poly market bets in the US for when the SoH (Strait of Hormuz) will reopen have declined sharply over the past week. Bets on a reopening by 13 May has declined 27% since last Friday to now only 39%. Expectations for when the SoH will reopen is sliding rapidly into the future. That implies a higher oil price," said Bjarne Schieldrop, chief analyst commodities at SEB Research wrote.