Today maybe our chance for Iran to avoid war. Commodity risk assets are falling as US-Iran nuclear talks (the third round of indirect negotiations, mediated by Oman) are taking place now, in Geneva, Switzerland. These talks have caused to drop over one dollar just because no one has stormed out and talks have been going on for hours. The truth is that these talks are crucial for the direction of the oil market as these talks are a last-ditch attempt to decide whether we can cut a deal with the Iranian regime or we move towards military action.
A move towards military action should see a significant surge in oil prices, maybe by as much as $10.00 a barrel. On the flip side we could see oil prices crash $10.00 a barrel if we indeed get a deal especially if the deal suggests an end to Iran’s nuclear program and the lifting of Iranian sanctions which theoretically could unleash many barrels of floating oil storage onto the market.
Here’s what we know so far: the talks reportedly got started between 9:21 and 10:30 AM Geneva time (that’s 3:21 to 4:30 AM Central Standard Time). Geneva runs on Central European Time, which is seven hours ahead of CST, so that timing checks out. According to one Iranian source the session began at 9:45 AM in Geneva—so, about 2:45 AM CST—and is still underway. Another report puts the start at 11:15 AM Iran time (which matches up to around 8:45 AM in Geneva, or again, 2:45 AM CST).
The times seem to vary a bit depending on the source, but that’s typical for indirect talks like this, where sessions can start in phases and aren’t always announced right on the dot. At the moment, it’s about 5:45 AM CST and these discussions have been going on for several hours and are expected to continue throughout the day. There’s no clear end time—these diplomatic sessions tend to be unpredictable and can last however long they need to.
So far, there haven’t been any major breakthroughs, and tensions are still running high with the U.S. military presence in the region The fact is that the negotiations are still putting downward pressure on these assets.
Update Oman: US-Iran talks to resume later today. US-Iran nuclear talks in Geneva end after three hours – Axios
The talks have had a big impact on Europe as well as the . Brent crude, of course, is going to be more sensitive to the potential loss of Iranian supplies and potential slowdown in the Strait of Hormuz. That is because the US is producing a record amount of oil and that’s going to buffer our country at least initially from any major impact or shortage of supply.
Also the impact on in Europe, according to ICIS (Independent Commodity Intelligence Service) experts in a recent analysis, say that escalating US-Iran tensions have raised the risk of a three-month closure of the Strait of Hormuz, a route that carries around 20 percent of global LNG trade and 25 percent of seaborne oil. ICIS modelling shows that a 90-day halt to Qatari LNG exports to Europe, alongside reduced spot cargo availability, would sharply tighten the global LNG balance and intensify competition between Asia and Europe for flexible supply.
According to ICIS experts in a recent analysis, the front month price could jump to around 90 €/MWh under this disruption scenario, averaging roughly 86 €/MWh during the blockade, significantly above the base case. While prices would ease once flows resume, they would remain elevated for several months. The modelling indicates a supply shock of about 14 percent over the three-month period, increasing the risk of physical shortages, particularly in Central and Eastern Europe, and pushing end of winter storage levels close to minimum EU requirements, potentially forcing policymakers to consider temporary flexibility on storage targets.
In the US warm temperatures has the market worried about a glut. Anthony Harrup writes that, “A spell of warm weather across most of the U.S. last week likely prompted the smallest withdrawal from natural gas inventories since late December, shrinking the deficit against the five-year average, according to a Wall Street Journal survey of analysts.
Natural gas in underground storage is expected to have fallen by 53 billion cubic feet to 2,017 Bcf in the week ended Feb. 20, according to the average estimate of 11 analysts, brokers and traders. Estimates range from a withdrawal of 38 Bcf to a withdrawal of 73 Bcf. The expected inventory decline compares with a five-year average withdrawal for the week of 168 Bcf, and would reduce the deficit against the average to 8 Bcf from 123 Bcf the previous week. It would put inventories 140 Bcf above the year-earlier level. The U.S. Energy Information Administration is scheduled to report natural gas storage data on Thursday at 10:30 a.m. EST.
This comes as Fox Weather reports that another ‘impactful’ winter storm targets Midwest, Northeast just days after historic blizzard buried cities. Just one week after a historic blizzard pummeled the region, another winter storm that is expected to bring significant snow and ice could target the Midwest and Northeast. The setup begins Saturday, when a quick shot of cold air settles across the northern third of the country. Yikes!
