Benchmark WTI crude futures fell by more than 5pc today after President Donald Trump cancelled plans to launch a new US military assault on Iran and insisted that talks with Iran are ongoing, despite denials from Tehran.
September Nymex WTI fell by $4.33/bl to $80.34/bl while October Ice Brent fell by $4.16/bl to $83.77/bl. The October Brent-October WTI spread widened by $2.61/bl to $5.87/bl.
WTI at the Magellan East Houston terminal was discussed at a prompt 90¢-$1/bl premium bid-ask spread to the Cushing benchmark at 3pm ET, according to theArgus Crude Market Ticker, down slightly from Friday's $1.03/bl volume-weighted average premium.
Trump on Sunday said he cancelled plans to launch a major new military assault on Iran, citing progress on a deal with Tehran. He told reporters that the talks would begin in earnest on Monday afternoon. But Iran's foreign ministry on Monday denied holding talks with the US, noting that, instead, Iran and Oman are negotiating over a safe shipping route through Hormuz.
Pressed by reporters on Monday to explain the status of diplomacy with Iran, Trump said that the talks with Iran are in fact "going on right now" and added that "we are straight about it but they deny". Trump also suggested that the strait of Hormuz would reopen fully, perhaps as soon as Tuesday.
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 by the US and Iran during which Iran and its proxies 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 US-Iran conflict.
Separately, Kazakhstan's energy ministry has denied media reports of a possible complete shutdown of the Caspian Pipeline Consortium (CPC) system. "This scenario is not being considered," it said in a 1 August statement.
Loadings of light sour CPC Blend crude have been disrupted by drone attacks on tankers calling at the CPC terminal on Russia's Black Sea coast. At least eight tankers have been targeted by drones at or on route to the terminal since mid-July.
Nymex RBOB fell by 25.49¢/USG to $2.9667/USG while Nymex ultra-low sulphur diesel fell by 24.43¢/USG to $3.8772/USG.
By Eunice Bridges
