Oil gains on lack of progress on US-Iran talks
Oil prices extended their gains today in the wake of stalled peace talks between Iran and the US, and as both nations maintained restrictions on the flow of trade through the Strait of Hormuz.
Brent crude futures rose $1.37, or 1.3%, to $103.28 a barrel in early trade, after settling above $100 for the first time in more than two weeks yestereday. West Texas Intermediate futures were up $1.52, or 1.6%, at $94.48.
Both benchmarks closed more than $3 higher yesterday after larger-than-expected gasoline and distillate stock draws in the US, and over the lack of progress on Iran peace talks.
"The oil market is repricing expectations with little sign of progress in finding a resolution in the Persian Gulf," said ING analysts in a note, adding that hopes for a resolution are fading as peace talks stall.
"In addition, Iran's seizure of two vessels attempting to transit the Strait of Hormuz suggests disruptions to shipments are set to continue," they added.
While US President Donald Trump extended a ceasefire between the countries following a request by Pakistani mediators, Iran and the US are still restricting the transit of ships through the strait, which carried about 20% of daily global oil supplies until the war began on February 28.
Iran seized two ships in the waterway yesterday, tightening its grip on the strategic chokepoint. Trump has also maintained a US Navy blockade of Iran's trade by sea, and Iranian parliament speaker and top negotiator Mohammad Baqer Qalibaf said a full ceasefire only made sense if the blockade was lifted.
The US military has intercepted at least three Iranian-flagged tankers in Asian waters and is redirecting them away from positions near India, Malaysia and Sri Lanka, shipping and security sources said.
With his extension of the ceasefire on Tuesday, Trump again pulled back at the last moment from warnings to bomb Iran's power plants and bridges. Trump has not set an end date for the extended ceasefire, White House press secretary Karoline Leavitt told reporters.
On energy trade, total exports of crude oil and petroleum products from the US climbed by 137,000 barrels per day to a record 12.88 million bpd as Asian and European countries bought up supplies after disruptions tied to the Iran war.
US crude stocks rose while gasoline and distillate inventories fell, the Energy Information Administration said yesterday.
Crude inventories rose by 1.9 million barrels, compared with expectations in a Reuters poll for a 1.2 million-barrel draw.
US gasoline stocks fell by 4.6 million barrels, while analysts had expected a 1.5 million-barrel draw. Distillate stockpiles dropped by 3.4 million barrels versus expectations for a 2.5 million-barrel drop.
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