Commodities
EMEA Oil Update: Brent Crude Slips in Early Trade as Iran, US Negotiations Progress
Brent crude futures slid about 5% in early trade on Monday as progress in negotiations between the US and Iran renewed optimism of a deal to end the war and reopen the vital Strait of Hormuz conduit.Brent crude futures were down 4.87% to $98.50 per barrel. Murban futures were last seen trading at $102.21 and were not trading by the time of publication of this oil price update."The negotiations are proceeding in an orderly and constructive manner, and I have informed my representatives not to rush into a deal in that time is on our side," US President Donald Trump said in a post on Truth Social.Trump said that the deal with Iran hasn't been fully negotiated yet, but noted that the relationship with Iran was becoming much more professional and productive and that both sides had to take their time and get it right.He, however, added that the US blockade will remain in full force until an agreement was reached, certified, and signed.US Secretary of State Marco Rubio on Monday downplayed hopes of an immediate breakthrough to end the Iran conflict. He said the US is looking to make a good deal, but if talks fail, it may handle the situation "another way", Reuters reported. Meanwhile, Tasnim News Agency said that the US was still blocking some parts of the possible agreement, including Iran's request to access its frozen money, the report added."We've been at this stage before, only for talks to break down. Therefore, the market will likely be more cautious about overreacting to these headlines. There also appears to have been some tempering of optimism," Warren Patterson, head of commodities strategy at ING, said in a note on Monday.How the US and Iran settle disagreements over the latter's nuclear program remains the big unknown, Patterson added.A crude tanker and a liquefied natural gas carrier recently navigated the Hormuz Strait, while Iran claimed that 33 commercial vessels passed through the crucial waterway during a 24-hour window over the weekend after obtaining approval, the ING note added.Exports from Iran are expected to decline over the coming weeks as the US blockade of Iranian ports continues to be enforced strictly, with 100 commercial vessels being redirected in the last six weeks as per the US Navy, according to Daniel Hynes, a senior commodity strategist at ANZ."Meanwhile, refining margins, especially for distillates such as diesel and jet fuel, remain elevated, signaling persistent product tightness and suggesting the shock is being absorbed more by refined products," Hynes added.