Iran has shown resolve to keep the Strait closed
Last week, the focus was on Iran firing at three vessels and boarding two of them. These developments underline that Iran is serious when it says that the Strait of Hormuz is closed, and that lifting the US blockade is a condition for resuming negotiations with the US. Iranian spokesman Ghalibaf described the US blockade as a clear violation of the ceasefire.
Trump said over the week that the ceasefire is now indefinite, after the two-week ceasefire ran out on Tuesday.
On Friday afternoon, various media outlets reported that a small Iranian delegation and the Foreign Minister would head to Islamabad, Pakistan. However, the US never came as the Iranians said they were not there to talk to the US.
On Monday, the well-informed and respected media outlet Axios reported that, based on sources within the US administration, Iran has offered to reopen the Strait of Hormuz if the US extends the ceasefire to allow both parties to work towards a lasting peace. Nuclear negotiations would come later, once the US blockade is lifted.
The core of the Iranian proposal is that negotiations on Iran’s nuclear programme should only be discussed once the war has ended and a “solution” for the Strait of Hormuz has been found. Iran also demands that the US lift its blockade of Iran before negotiations can begin.
This is in direct contradiction to the US position, which holds that the nuclear issue must be resolved first or in parallel.
The US responded yesterday. The White House made it clear that it does not negotiate through the press and that it stands firm on its “red lines”. The Wall Street Journal reported yesterday that Trump and his national security team are sceptical of Iran’s proposal. They discussed the proposal yesterday. However, the Wall Street Journal also writes that the US will continue negotiations and present a counterproposal in the coming days.
From a market perspective, a picture is emerging of an oil market that no longer expects a quick reopening of the Strait of Hormuz. This continues to point to upside risk for oil prices in the coming days.
UAE leaves OPEC and OPEC+
UAE leaves OPEC and OPEC+ – the beginning of the end for OPEC and OPEC+?
The UAE has just unexpectedly announced that it will leave OPEC and OPEC+ on May 1 this year.
The UAE’s energy minister says the decision was taken after evaluating the country’s production policy and production capacity. The minister also says that production will now be gradually increased.
This has no impact on the oil market here and now. The UAE is already producing all the oil it can export outside the Strait of Hormuz via the pipeline to Fujairah. The same applies to the other oil producers in OPEC and OPEC+. As a result of the war, all quotas are in reality currently out of play.
This may also be why the announcement is coming now, when the Strait of Hormuz is closed. It has no immediate impact on the oil price here and now. The Brent front-month contract initially fell by around USD 2 on the announcement, but has already recovered half of the loss and is now trading around USD 110.7.
