DTN Oil Update

Karim Bastati
DTN Analyst

VIENNA (DTN) -- Oil prices plunged Monday morning after U.S. President Donald Trump said that the U.S. and Iran were in negotiations to resolve their ongoing conflict diplomatically, and that he had ordered the postponement of attacks on Iranian energy infrastructure.

Just hours before the 48-hour deadline Trump gave Iran to reopen the Strait of Hormuz or face attacks on power plants, the president in a social media post said the U.S. and Iran have been in negotiations over the past two days about a "complete and total resolution to hostilities in the Middle East". He added that he had instructed the Department of Defense to halt strikes on power plants and energy infrastructure for a five-day period, "subject to the success of the ongoing meetings and discussions."

Iranian news agencies Fars and Tasnim both denied that any talks were ongoing, and said that the U.S. President backed down due to Iranian threats of counterattacks on energy infrastructure in the region.

Israel's military, ally to the U.S. in the operation against Iran, also said it was continuing with strikes in the heart of Tehran.

Iran has stepped up attacks on neighboring energy installations since airstrike on its largest natural gas field by Israel last Wednesday.

The International Energy Agency said that more than 40 energy assets across nine countries in the Middle East have been severely damaged by the war.

Near 8 a.m. EDT, front-month crude benchmarks WTI and Brent were down 5.8% on the day. NYMEX WTI futures for May delivery fell $5.66 to $92.57 bbl, after hitting a low of $84.37 bbl earlier on Monday following the president's remarks. ICE Brent for May delivery slid $6.51 to $105.68 bbl, following an intra-day low of $96 bbl.

ULSD futures for April delivery shed $0.0946, or 2%, to trade near $4.5138 gallon, and front-month RBOB futures retreated $0.1253, or 3.8%, to $3.1609 gallon.

The U.S. Dollar Index softened by 0.16 points to 99.3 against a basket of foreign currencies.