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[MARKET ANALYSIS] Crude recovers off lows after taking a breather overnight, with US-Iran no closer to an agreement

The geopolitical landscape remains tense, particularly with the US-Iran situation, which has implications for oil supply and prices.

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"Pakistan’s Foreign Ministry is all set to hold a consultative meeting of its envoys in Middle East, West Asia and important capitals on Thursday in Islamabad", Pakistani journalist Mallick posts

UK Health Secretary Streeting remains in his role as Health Secretary, according to i Paper's Donaldson

[MARKET ANALYSIS] Crude recovers off lows after taking a breather overnight, with US-Iran no closer to an agreement

French Finance Minister Lescure says there is no plan for a discussion on an oil stock release at the G7. Though, the topic may be brought up.

[MARKET UPDATE] DXY rises above its 200 DMA (98.52), next level to the upside the 5th May peak at 98.58; News flow light

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  • In geopolitics, US President Trump said Iran will either make a deal or be “decimated”, while reaffirming the effectiveness of the blockade. Meanwhile, Iran reiterated five conditions before entering nuclear talks, including sanctions relief, reparations and recognition of sovereignty over the Strait of Hormuz. US intelligence reportedly assessed Iran still retains significant missile capabilities along the Strait of Hormuz. Further, Sources familiar with negotiations said Iran’s top conditions before nuclear talks include ending the war on all fronts, lifting sanctions, releasing frozen funds, compensation for war damages and recognition of Iranian sovereignty over the Strait of Hormuz.
  • US President Trump is on the way to China for talks with his Chinese counterpart during the Thursday and Friday sessions. The public tone is expected to be warm and friendly, while the substance of the meeting will cover a range of topics. No breakthrough is expected in US-China relations, with attention instead focused on implications for Iran and Taiwan. The situation in Iran will likely be one of the core topics, with some fearing an Iran-for-Taiwan bargain, although Trump downplayed how much Iran will be part of talks.
  • Elsewhere, the IEA released its monthly oil market report today, in which it forecasts world oil supply to fall by 3.9mln bpd in 2026, assuming Strait of Hormuz flows gradually resume from June (prev. forecast 1.5mln bpd fall); Sees total world oil supply 1.78mln bpd lower than demand in 2026 (vs. prev. forecast 0.41mln bpd higher). IEA noted the war in the Middle East is depleting global oil inventories at a record pace.
  • WTI June and Brent July futures have trimmed losses seen overnight, with the former in a USD 100.56-102.27/bbl range and the latter in a USD 106.09-107.56/bbl. Dutch TTF is now flat intraday after recovering from sub-EUR 46/MWh lows to levels north of EUR 46.50/MWh.
  • Spot gold resides in a USD 4,687.71-4,727/oz range, well within yesterday’s USD 4,638.36-4,773.58/oz parameter, with the 100 DMA at USD 4,786.96/oz. Spot silver takes a breather from six straight sessions of gains, with the precious metal pulling back a touch after hitting resistance around USD 87.80/oz. Elsewhere, Shanghai Futures Exchange adjusted the price limit for the AG2705 silver futures contract to 17%.
  • Base metals are posting varying gains across the board amid a broadly but cautiously positive risk appetite across Europe and US markets, and despite a firmer USD. 3M LME copper resides north of USD 14k/t in a 14,086.58- 14,191.48/t range at the time of writing.
Context

Trump's assertive comments on Iran may lead to heightened volatility in energy markets; any lack of agreement could prolong disruptions, impacting crude prices. Additionally, the IEA's revised oil supply projections indicate possible future shortages, which could add further support to oil prices in a fragile global supply environment.

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