Benchmark WTI crude futures were down by more than 6pc in morning trading today after US president Donald Trump cancelled plans to launch a new military assault on Iran and announced a new round of talks.
September Nymex WTI was trading at about $79.30/bl at 10:30am ET, down from its $84.67/bl settle on 31 July. October Ice Brent futures were also down in early trading.
Trump has been threatening an escalation in the Iran war in response to an apparent surprise attack on 28 July against US bases in the region. But progress on the "perimeters of a deal" prompted Iran and other Middle East countries to ask the US to hold off any attack to provide more time for negotiations, Trump said in a social media post on 1 August.
"I have agreed, for the future benefit of the WORLD and, likewise, the survival of a successful and prosperous Iran, to cancel the attack, subject to being able to rapidly make a DEAL," Trump said. "The Country of Israel joins me in this commitment."
Iran, meanwhile, has denied holding talks with the US. "We are not currently negotiating with the US," Iran's foreign ministry spokesman Esmail Baghaei said Monday.
Baghaie said that Iran was currently holding bilateral negotiations with Oman to determine a safe shipping route through the strait of Hormuz. But he said these discussions themselves would not lead to a reopening of the strait.
Oil and gas exports through the strait have plummeted since the start of the US-Iran war on 28 February. The interim peace deal between the two sides in mid-June — which saw transits through the waterway briefly rise — collapsed in early July due to disagreements over control of the strait.
This sparked weeks of military attacks between the US and Iran, during which Iran and its proxies have launched drone and missile attacks on oil infrastructure in neighbouring countries.
Meanwhile, the Opec+ core group of seven countries agreed on Sunday to raise collective production targets by a further 188,000 b/d starting in September, completing — at least on paper — the phased unwinding of the 1.65mn b/d voluntary production cuts first announced in 2023.
The seven countries participating in the voluntary cuts — Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria and Oman — reiterated their commitment to compensate for past overproduction.
But quota increases over the past months have not translated into additional physical supply because of disruptions to exports resulting from the conflict between the US and Iran.
By Eunice Bridges

