EMEA Oil Update: Crude Mixed on Saudi Supply Concerns Ahead of US-Iran Talks
EMEA crude futures diverged in after-hours trading on Friday on concerns over Saudi Arabia supply disruptions and persistent bottlenecks in the Strait of Hormuz ahead of Iran-US talks.Brent crude futures gained by 1.22% to $97.17 per barrel, while Murban oil futures were down 1.66% to $97.97/bbl.ING strategists said crude extended gains for a second session amid fresh Middle East supply concerns.On Thursday, Saudi Arabia said Iranian attacks on its energy infrastructure reduced the country's oil production capacity and East-West Pipeline throughput by about 600,000 barrels per day and 700,000 b/d, respectively.Saudi Arabia's Ministry of Energy said Thursday Iran's continued attacks on energy infrastructure lead to reduced supply and slow recovery, according to local media reports. Kuwait also said it intercepted drone attacks targeting key energy facilities on Friday.Earlier in the week, the US Energy Information Administration said Middle East producers shut in about 7.5 million b/d of crude oil production in March as storage capacity tightened, with outages projected to rise to 9.1 million b/d in April.Fueling bearish sentiment, President Trump intensified his rhetoric against Tehran, saying Iran "doesn't seem to realize they have no cards," the only leverage the country holds is its ability to create short-term pressure by blocking the Strait.The remarks come a day after Trump warned that Iran should stop charging tolls to vessels transiting the strategic waterway, as tanker traffic remains restricted on Friday.ING analysts said while Trump struck an optimistic tone on resolving the six-week conflict, he threatened Tehran over charging fees in the Hormuz.The latest shipping data shows that vessel activity through the Hormuz has increased slightly since the ceasefire took effect on Apr. 8, but flows remain well below normal levels. MarineTraffic said 14 vessels crossed the Strait on Apr. 8-9, including nine crossings on Apr. 9.On Friday, Iranian Parliament Speaker Mohammad Bagher Ghalibaf said that two agreed-upon actions, a ceasefire in Lebanon and the release of Iran's blocked assets, must be implemented before negotiations begin.Going forward, market participants' focus is now on the sustainability of the US-Iran ceasefire ahead of talks in Islamabad, Pakistan, on Saturday.Saxo Bank strategists said the Hormuz closure remains a key focus ahead of talks between US and Iranian officials.