Brent Settles At Three-Week Low

by Bloomberg | G. Levin, M. Gindis, C. Gorrivan
click here to read this article at Rigzone.com
*this article was not written by Roseland Oil & Gas

Oil slid to the lowest in over three weeks as optimism grew that the US and Iran are moving closer to an agreement that would reopen the vital Strait of Hormuz chokepoint.

Brent fell 5.3% to settle around $79 a barrel, the lowest since July 10, on signs that an interim deal between Washington and Tehran could help normalize commercial shipping in the strait and stop further fighting.

Visible flows through the waterway, which carried about a fifth of the world’s crude before the war, have slowed in recent weeks after the two countries resumed military strikes. Attacks on vessels and Iranian threats have heightened safety concerns for shipowners and crews.

“This is a market that consistently reprices risk on the prospect of flows resuming rather than the details required to achieve them,” said Rebecca Babin, senior energy trader at CIBC Private Wealth Group. “As this cycle has repeated, traders have become less willing to buy dips and more inclined to sell rallies, as upside moves have consistently lacked follow-through while downside moves have tended to unfold with greater velocity.”

About 7 million barrels each day are flowing through Hormuz each day, Mike Sommers, chief executive of the American Petroleum Institute, said in an interview with Bloomberg television on Tuesday. That’s well below levels seen pre-war.

Oil prices have eased dramatically from last month’s peak, however, as US President Donald Trump said he postponed new strikes on Iran to give talks more time. As Trump pushes to ease pain at the pump, the White House is expected to extend a waiver of the Jones Act, Reuters reported, citing people familiar with the matter. The act requires cargo moving between US ports to be carried on ships built domestically.

Iran is considering allowing European nations to remove mines from Hormuz, diplomats familiar with the matter told Bloomberg, a notable softening of a previous stance that foreign countries couldn’t join demining efforts. The move would give the shipping and insurance industries some much-needed third-party assurance that the strait is safe after more than five months of military conflict.

US Treasury Secretary Scott Bessent said in an interview with CNBC on Tuesday that “there is a chance we may have a deal today or tomorrow to open the strait.” Qatar, meanwhile, said a proposed de-escalation resolution was “being circulated between the parties,” though cautioned that there’s no solid agreement yet.

Even if a short-term agreement is reached, it might still fail to end the war conclusively or resolve US and Israeli concerns about Iran’s nuclear program.

Several technical factors are also amplifying oil’s selloff. Trend-following commodity trading advisers slashed long positions to sit at 36% long in Brent, compared with 73% at the start of Tuesday’s session, according to data from Kpler’s Bridgeton Research Group. The robot traders are known for their tendency to exacerbate price swings in both directions.

Meanwhile, oil giant Saudi Aramco said it’s looking at options to expand its crude export capacity, including by potentially increasing the size of an east-west pipeline to the port of Yanbu, a Hormuz bypass that’s become a vital lifeline for Saudi Arabia during the war. The kingdom’s observed crude exports edged lower in July as the war disrupted flows through Hormuz and Houthi rebels threatened shipments in the Red Sea.

As conflict impedes flows from the region, global oil markets are “absolutely” in a supply deficit, Pacific Investment Management Co.’s Greg Sharenow said in an interview with Bloomberg television on Tuesday.

Oil Prices

Oil prices tumbled as hopes for a US-Iran agreement raised expectations that shipping through the Strait of Hormuz could resume more normally.

• WTI for September delivery dropped 5.7% to settle at $75.77 a barrel in New York.
• Brent for October settlement fell 5.3% to close at $79.36 a barrel.

Meanwhile, Ukraine’s shifting strikes across Russia’s oil supply chain increase the risk of further disruptions. Large refineries, oil tankers, and major pipeline infrastructure were hit at least 30 times in July — the second-highest monthly number of attacks since Russia’s full-scale invasion in 2022.

In recent days, four ships have completed loadings at the Caspian Pipeline Consortium terminal, a Black Sea port on Russia’s coast crucial to Kazakhstan’s crude exports. Recent attacks on oil tankers in the area have made some vessel owners cautious about loading there.

by Bloomberg | G. Levin, M. Gindis, C. Gorrivan
click here to read this article at Rigzone.com
*this article was not written by Roseland Oil & Gas