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Oil futures: WTI falls 5pc as US cancels Iran strikes
Houston, 3 August (Argus) — 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 the Argus 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
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