Update(1715ET): Oil prices have been declining throughout the day, as the White House continues to signal that there are no imminent new attacks on Iran, and that time will be allowed for negotiaitons.
President Trump on Monday afternoon has continued to express optimism related to Qatar-mediated talks, while also telling reporters that a new bombing campaign against Iran doesn’t seem to be a very necessary thing “at this point”.
He issued a long Truth Social post after meeting with the Prime Minister of Qatar in the Oval to talk about the status of indirect negotiations, but also said that the Pentagon remains “locked and loaded”.
- Trump speaks to reporters at the White House
- “We’re just keeping it the status quo, and we’re doing that really at the behest of countries that are their neighbors,” Trump adds
- “We’re seeing momentum toward the end of this conflict,” he says on Iran
Status quo’ing it…
Trump further expresssed that Israel is now safe “from Iranian dangers and threas” – but still there’s been no setting forth of what precisely a US exit or end to the conflict looks like. And for now this “military engagement” will continue, Trump’s latest Truth Social post suggests.
Meanwhile, there were a series of false headlines throughout the day…
IRAN’S TOP SECURITY OFFICIAL TO US: ‘STOP MANUFACTURING FAKE NEWS ABOUT IMAGINARY TALKS’
Going after Rep. Massie…
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Saudi-owned news outlet Al Arabiya reported late Monday afternoon that a Qatari-Pakistani proposal has revived hopes for negotiations between the US and Iran negotiators, with a preliminary deal to curb Iranian uranium enrichment appearing likely.
Al Arabiya outlines the US-Iran path toward a preliminary enrichment deal:
- Arrangements are underway to discuss the return of IAEA inspectors to Iran, without specifying the scope of their mission.
- Washington has allowed uranium enrichment inside Iran at a level of 3.67%, and Tehran has agreed.
- Discussions are underway regarding the involvement of a third country to facilitate the reduction of highly enriched uranium levels in Iran.
- A preliminary agreement on reducing Iranian uranium enrichment is likely.
The reported uranium enrichment deal would let Iran retain a limited civilian nuclear program while curbing its ability to produce material usable in nuclear weapons.
In energy markets, WTI legged lower following the news, down to about the midpoint of the $85-a-barrel level.
Higher timeframe shows positive diplomatic signaling over the past week has evaporated $20 or so of the war risk premium built into oil.
Brent Selloff Deepens After Worst Week Since COVID; US Gas Prices Poised To Break Below $4
Brent crude futures dipped into the $93-a-barrel handle early Monday morning, extending last week’s selloff, the largest weekly decline since April 2020, while WTI traded near $87.37 a barrel.
Intraday
Weekly
Continued diplomatic signals outweighed a wave of regional violence over the weekend, including a Houthi missile strike on a Saudi Aramco office tower in Riyadh’s financial district, tanker attacks in the Strait of Hormuz, US forces disabling a vessel in the critical waterway, and US strikes on Iranian air-defense equipment on Qeshm Island.
President Trump on Sunday finally got the memo after the GOP’s disastrous midterm.
Trump remarked Sunday that it is “highly unlikely” he will need to order US forces to war with Iran as long as there is progress in negotiations. Indirect talks are currently happening via Qatari and Gulf mediation.
“It depends on whether or not they sign a very strong agreement,” Trump told CNN’s Jim Sciutto in a phone interview. Then the president explained:
“The answer is highly unlikely it’s going to be necessary. They’re a failing nation. It just came out, you saw this year, 301% inflation. Highly unlikely it will be necessary. I would if necessary, but we hit them really hard. I hit them so hard. You don’t know how hard I hit them.”
Diplomatic signals mixed after Secretary of State Marco Rubio described some Iranian demands as “outrageous and ridiculous.”
Commonwealth Bank of Australia commodities analyst Vivek Dhar said that any US-Iran deal to lift the Hormuz blockade could send Brent down to the $70 to $85 levels. He noted that Brent was still holding a slight war risk premium into the new week after much of it evaporated last week.
Last Thursday, UBS energy expert Dominic Ellis wrote that even with the rapid unwind of the geopolitical risk premium in Brent, there’s still going to be a floor in Brent because of the “near 700 mn drawdown in global inventories as a result of the conflict so far and the at least 40-50mb ongoing monthly inventory draw if the conflict continues will drive incremental demand that keeps a floor on oil for the next 18-24 months.”
US distillate stockpiles fell below 100 million barrels for the first time since 2003.
The good news for US drivers ahead of Thanksgiving is that the national average for gasoline at the pump, tracked by AAA, is about to drop below the politically sensitive $ 4-a-gallon level.
Traders are monitoring Ukrainian strikes on Russian refineries ahead of US-mediated talks in Abu Dhabi on Tuesday. This will be a three-way meeting between Washington, Moscow and Kiev.
