DTN Oil Update
Oil Prices Steady Ahead of US-Iran Talks, Ceasefire End
VIENNA (DTN) -- Oil and product futures were mixed Tuesday morning as market participants awaited word on the U.S. and Iran continuing negotiations before a ceasefire that will expire Wednesday.
Iran has so far sent no delegation of any level to Islamabad, Pakistan for the talks with the U.S., Iranian media reported, contradicting an earlier report by the Wall Street Journal.
In energy markets, price volatility remained elevated amid seesawing expectations on the future of the U.S.-Israel war on Iran that hinges on the outcome of the Islamabad talks and whether Pakistan will be able to broker another extension of the ceasefire, which expires at 8:00 p.m. EDT Wednesday. Trump, in a televised interview Tuesday morning, said he no plans for an extension.
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At stake is the resumption of global oil flows on the Strait of Hormuz, which Iran has shut since the start of the war at the end of February, crippling some 20 million bpd of petroleum liquids. Whether the fighting continues after Wednesday or permanently stops has been catalyst for intra-day price swings of more than 10% Friday and 5% Monday.
U.S. President Donald Trump on Monday called an extension of the ceasefire "unlikely," and Tehran said the ongoing U.S. blockade of maritime traffic in and out of Iranian ports presented a major roadblock to any future negotiations.
Notwithstanding the latest out of Tehran, media outlets earlier said Iranian diplomats will meet in Islamabad U.S. negotiators led by Vice President JD Vance.
Crude futures tumbled as much as 12% on Friday when Iran briefly announced that the Strait of Hormuz was passable to all maritime traffic. But just a day later, the Iranian military reimposed traffic restrictions following the U.S. seizure of an Iranian-flagged ship. Prices have since clawed back most of Friday's decline.
To partially ease the jam in global flows, the U.S. Treasury Department on Friday renewed a 30-day waiver on sanctioned Russian oil by four weeks. Asian refiners have increasingly turned to Russian oil to fill the gap caused by the now more than seven-week long shut-in of a fifth of global petroleum liquids flows in what the International Energy Agency has dubbed the largest oil supply disruption in history.
Russian crude flows, however, have also increasingly suffered disruptions from a barrage of Ukrainian drone attacks on main oil export terminals in the Baltic and Black Seas. Moscow is reportedly set to halt flows of Kazakh crude oil to Europe through its Druzhba pipeline system starting May 1.
Near 7:50 a.m. EDT, NYMEX WTI crude for May delivery was down $0.32 to $89.32 bbl, and ICE Brent for June fell $0.30 to $95.18 bbl. Their respective second-month contracts edged higher.
Downstream, NYMEX ULSD futures for May delivery advanced $0.0213 to $3.5622 gallon, and front-month NYMEX RBOB futures rose $0.0139 to $3.1307 gallon.
The U.S. Dollar Index strengthened by 0.125 points against a basket of foreign currencies to 98.03 points.