Brent oil was up more than three percent in intraday trading on Monday.
In a market quick take posted on its website today, Saxo Bank outlined that Brent was rising in early European trading after U.S. President Donald Trump “rejected Iran’s proposal to reopen the Strait of Hormuz, while Tehran maintained its seven-day conditions”.
“The path back to talks remains highly uncertain, with Trump saying Iran had overplayed its hand,” Saxo Bank noted in its quick take.
“This likely reflects the recent increase in oil flows through the Strait, none of which has come from Iran, further tightening the economic screws on Tehran,” it added.
The market quick take pointed out that spot-market tightness “remains extreme, with the soon to expire November Brent contract trading $8.2 per barrel, or 7.6 percent, above December, which is currently below $100”.
In a press gaggle at the White House on September 26, a video of which was posted on the White House YouTube channel, Trump said, “I’m rejecting their [Iran’s] deal”.
“They want to make a deal where they open the Strait immediately because they’re losing so badly … we’re winning tremendously. We have total control of the Hormuz Strait. Massive amounts of oil are coming out of the Hormuz Strait,” he added.
“They want to make a deal and I think that’s fine, I like making a deal too but … that deal would not be acceptable,” he continued.
In a televised Meet the Press interview with NBC News on Sunday, Seyed Abbas Araghchi, Foreign Minister of the Islamic Republic of Iran, outlined, when asked for his response on Trump’s rejection of Iran’s seven-day ceasefire proposal, that the seven-day plan “can bring … life back to normal in the Persian Gulf and in the Strait of Hormuz”.
“Why are they rejecting this? This is a very important question that they have to answer,” he added.
“Our proposal is very clear. We are ready to open the Strait if certain things are done by the U.S. and these certain things are not new, have not come from … space. These are our rights that we want to be respected,” he continued.
In crude market commentary sent to Rigzone today, Aaron Kildow, Crude Commodity Owner at Sparta Commodities, flagged “another wild week in the oil markets where true volatility is borne by the whims of our political leaders and the tides of war”.
“If the market wasn’t tough enough to trade between ebbs and flows of vessel counts and the shifting sands of peace talks, traders around the world now need to worry about the loss of one to two million barrels per day of diesel exports, just as the northern hemisphere goes into winter,” he added.
Kildow warned in his commentary that the fallout of a diesel export ban does not stay in its lane – “it spills out across the spectrum of oil markets”.
In an oil and gas report sent to Rigzone on Friday by the Fitch Group, analysts at BMI, a unit of Fitch Solutions, highlighted that oil prices have come under renewed upward pressure this month, “due to rising Asian import demand, declining strategic petroleum releases, lingering Russian export disruptions, and the attack on, and subsequent suspension of, the East-West pipeline in Saudi Arabia”.
“Dated Brent and Brent futures peaked at $131.8 per barrel and $108.8 per barrel, respectively, at the September 15 close, having risen 20.2 percent and 46.9 percent over the first half of the month,” the BMI analysts pointed out.
“Price pressures in the market for refined fuels, notably diesel, also remain acute, with the benchmark U.S., European, and Singapore contracts also reaching peaks on September 15, having gained 17.1 percent, 16.4 percent, and 19.6 percent, respectively over the same period,” they added.
“Oil markets have subsequently sold off, but prices for both crude and fuels remain extremely elevated in historical terms,” they continued.
Tamas Varga, an analyst at PVM Oil Associates, which is part of TP ICAP, warned in market commentary sent to Rigzone on Friday that “predicting price movements is a brave undertaking”.
“Betting on de-escalation, either in the Middle East or Ukraine, ditto. Tension undeniably keeps brewing, and not exactly under the surface,” Varga added.
“No doubt, this madness will come to an end; that much one can be confident of. Even the timing of it is becoming clearer – possibly after November. Worryingly, though, the outcome and what will happen in the interim are not,” Varga noted.
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