CRUDE WRAP: WTI (U6) SETTLES USD 4.33 LOWER AT USD 80.34/BBL; BRENT (V6) SETTLES USD 4.16 LOWER AT USD 83.77/BBL
Oil was sold following Trump cancelling strikes over the weekend against Iran, at the request of Iran and other Middle Eastern countries, subject to making a deal rapidly. Prices gapped lower, showering little appetite to trim losses throughout denials from Iran. Officials in Iran, rejected the idea that the direct talks were ongoing with the US and that talks with Oman on the Strait of Hormuz are unrelated to any third party; Issues with the US should be addressed at a later stage. Additionally, Iran said there are no plans to receive a US delegation or send an Iranian delegation in the coming days. Ahead of settlement, US President Trump said they are talking about having the Strait completely open by tomorrow; thereafter, Phase Two is when they will talk about the denuclearisation of Iran; short-lived reactions were seen on Trump's remarks. WTI and Brent traded between USD 78.43-81.30/bbl and USD 81.55-84.66/bbl respectively.
Energy data
- Kpler shipping data showed 18 vessels passed through the Bab al-Mandeb on Sunday vs 27 on Saturday
- Bloomberg's Blas posts "All counted, probably ~5m b/d is flowing dark..." via the Strait of Hormuz
- Kuwait's July crude oil production rose to 1.97mln bbls/day in July (prev. 1.67mln/day), its highest level since the start of the Middle East conflict, Bloomberg reports
- Kazakhstan's oil and gas condensate production fell to 1.85mln bpd in July (prev. 2.16mln bpd) due to export disruptions through the CPC, according to sources
- Russia's seaborne crude oil exports from its western ports are set to rise 4% in August M/M, according to Traders
Sessions of this kind, where a crude geopolitical risk premium is unwound on de-escalation headlines rather than on any change to physical supply, follow a familiar sequence: the gap lower prices out the tail risk first, and the follow-through then depends on whether the diplomatic track survives contact with official denials, which here arrived from Tehran even as prices stayed offered. The distinction that matters for the forward curve is between headline risk and flows: freight, insurance and shipping data through the Strait of Hormuz and Bab al-Mandeb are the transmission channel that would convert rhetoric into a lasting supply story, and the tanker counts cited in the wrap are the tell for whether rerouting and dark flows are actually tightening. Episodes where the strait stays open have historically seen the prompt premium bleed out over subsequent sessions even amid contradictory official statements, with spreads and the Brent-Dubai and WTI-Brent relationships more informative than the flat price alone. The supply-side data points, Kuwaiti output at a conflict-era high, Kazakh barrels constrained by CPC export disruption, and rising Russian western-port loadings, frame the underlying balance that the premium was sitting on top of. Worth watching are whether the flagged Phase One reopening is confirmed in vessel tracking rather than in remarks, and how the curve treats any relapse in the talks. As a wrap, the move is priced; the open question is the durability of the unwind.