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Crude oil production up in June
Brent crude oil rebounded more than 3% on Monday after US President Donald Trump rejected a peace deal from Iran to resolve their conflict and reopen the Strait of Hormuz.
Brent futures rose $3.98, or 3.82%, to $108.30 a barrel at 0959 GMT, while US West Texas Intermediate crude was at $95.93 a barrel, up $3.52 or 3.81%.
“Oil prices appeared to have jumped on the back of President Trump rejecting Iran’s peace proposal,” said Hamad Hussain,” senior climate and commodities economist at Capital Economics.
Iran announced a peace proposal last week at the UN General Assembly in New York, saying it had been transmitted to the Americans via Qatari mediators. Trump said on Saturday he rejected the plan, but told Axios in a phone interview on Sunday that he expected US negotiators to engage in more talks this week.
“While greater flows through the Strait of Hormuz are easing some of the upward pressure on prices, the bigger picture is that the oil market remains in a deficit,” Hussain said.
Yemen’s Saudi-led coalition said early on Saturday it had intercepted two ballistic missiles and two drones launched by the Iran-backed Houthis towards the kingdom.
Meanwhile, crude oil exports from key Middle East producers rebounded in September to 12.8 million barrels per day, the highest since the war started in February, preliminary data from Kpler showed on Monday, as Saudi Arabia and the United Arab Emirates boosted exports.
The rebound came following a recovery in shipments via the Strait of Hormuz, which were set to hit about 7.4 million bpd this month, the data showed, as Saudi Arabia diverted exports from the Red Sea port of Yanbu to its eastern Ras Tanura port following attacks that damaged its East-West pipeline.
Brent edged up 0.4% last week but WTI lost over 7% on concerns that the US may ban diesel exports to ease record prices which could curb US refining output.
European low-sulphur gasoil’s premium to Brent crude futures hit a record of about $95 a barrel last week after Trump said he backed the idea of a diesel export ban to lower prices that have hit record highs owing to a global supply shortage.
Goldman Sachs said that while Europe and especially Latin America, including Brazil and Mexico, are the key destinations for US diesel exports, a diesel tightening shock would likely quickly spread to the rest of the world including Asia as Latin America and Europe start pulling harder on remaining diesel barrels from countries such as India.
“We estimate that each week of a US diesel export ban would raise European wholesale diesel (ARA gasoil) prices by $3/bbl, or just under 2%,” the bank added.
Elsewhere, Ukraine’s military has struck Russian oil facilities in the Krasnodar region, President Volodymyr Zelenskiy said on Monday.
REUTERS
