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Oil markets are currently pricing in the reopening of the Strait of Hormuz sooner rather than later, according to a Bloomberg interview with Ben Marshall, CEO of Vito Group in the Americas.
He told reporters on Monday that markets are “singularly focused” on when crude starts moving through Hormuz at increased levels.
Marshall said that while any peace deal would bring prices even lower, no progress in fully reopening the strait to oil exports would mean around 10 million barrels a day will continue to be shut out of the market – “another week is another 70 million barrels that the market can’t afford to lose,” he said.
“If oil prices sustain above $100, you will see demand destruction,” he added. “And above $120 you will see severe demand destruction.”
Marshall noted Asian buyers are increasingly turning to the U.S. for crude as the conflict drags on.
“These are very difficult times,” Marshall said, adding that market disruptions during the Covid-19 pandemic were relatively more predictable.
“The event that we’re undergoing right now is orders of magnitude – and I don’t say that lightly –different than other risks faced by the market,” Marshall said.
Working toward an agreement: Earlier today, President Trump said there have been talks between the U.S. and Iran over the past day, where the two parties had “major points of agreement,” noting that a deal could be done soon to settle to the war, according to Reuters.
“We have had very, very strong talks. We’ll see where they lead. We have points, major points of agreement, I would say, almost all points of agreement…we’ve had very strong talks, Mr. Witkoff and Mr. Kushner had them, Trump told reporters in Florida.
Trump also noted that he’s working toward a ceasefire over the next five days, further stating that by the end of that period, there could be a “very good deal for everybody.”
Earlier Trump backed down on a threat to target Iran’s power network, saying he would postpone any strikes on power plants and energy infrastructure. Following the message, crude oil and the U.S. dollar plummeted, while stocks rallied and government borrowing costs declined.
However, Iran has persistently denied that it engaged in negotiations with the U.S., after President Trump postponed the threat to bomb Iran’s power grid amid reported productive talks with unidentified Iranian officials.
A European official said that while there had been no direct negotiations between the two nations, Egypt, Pakistan and Gulf states were relaying messages. A Pakistani official and second source told Reuters that direct talks on ending the war could be held in Islamabad as soon as this week.
Ethanol gaining in popularity: Several countries, mostly in Asia, are moving to increase the use of ethanol in their car fleets to cut demand for gasoline as oil prices remain high, according to Reuters report citing supply chain service provider Czarnikow.
Czarnikow said there are requests among ethanol producers in India to raise blending in gasoline above the current level of 20%, while the Philippines is looking to import more ethanol to meet its E10 blend obligations. Meanwhile, Vietnam was said to be planning to roll out a 10% ethanol blending in gasoline from June.
E20 is a cheaper fuel than pure gasoline in Thailand for the first time in almost a decade, stated Czarnikow, adding the country could divert more sugar to make ethanol.
The report said if Brazil’s company Petrobras adjusts the local price for gasoline to import parity, ethanol prices could rise to the equivalent of a sugar price of 18 cents.
Gold Busts: Gold plunged more than 8% on Monday to the lowest level seen in four months, after carving the largest weekly loss in over 40 years last week, as escalating tensions sparked inflation concerns and raised expectations of higher global interest rates, Reuters Reports.
Last week’s more than 10% drop marked the largest weekly loss since February 1983, and has retreated around 25% from its recent record high of $5,594.82 an ounce, scored on January 29.
“With the Iranian conflict into its fourth week, and oil prices hanging around the $100 level, expectations have pivoted from rate cuts to potential rate hikes, which have tarnished golds appeal from a yield point of view,” stated Tim Waterer, chief market analyst, KCM Trade. He further stated, “gold’s high liquidity appears to be hurting it during this risk-off period. Downturns in stock markets are leading to gold positions being closed to cover margin calls on other assets.”
“A reinforced shift from safe-haven allocation towards macro-driven positioning could skew risks further to the downside, as a firmer U.S. dollar and the receding probability of the Fed easing dominate the narrative,” stated BMI, a unit of Fitch solutions.
India bound: Two tankers bound for India sailed through the Strait of Hormuz on Monday, though taker traffic through the strait is still down 95%, according to Reuters who cited a shipbroker.
Gulf nations including Saudi Arabia and the United Arab Emirates have seen exports blocked since the war began on February 28 and Tehran launched attacks on ships.
The two-Indian flagged tankers were carrying liquified petroleum gas (LPG) used mostly for cooking in India. They loaded at anchorages in Kuwait and the UAE, according to LSEG ship-tracking data.
India’s Ministry of Ports, Shipping and Waterways, confirmed the two tankers, carrying more than 92,000 tons of LPG had sailed through Hormuz and were expected to reach ports in India between March 26-28.
While shipments are down, Iran is still sailing, notes Reuters. At least 14 Iran-flagged loaded oil tankers have reached Asian waters around the Singapore Strait since February 28, according to analysis from U.S. advocacy group United Against Nuclear Iran (UANI), which monitors Iran-related tanker traffic.
“It’s business as usual for Iran,” noted UANI senior adviser Charlie Brown.
On Sunday, Iran received its first Western-linked ship since the war began when a Greek-operated dry bulk carrier delivered grain from Canada to the port of Bandar Imam Khomeini, according to data from Lloyd’s list Intelligence and a source familiar with the matter, noted Reuters.
Up for grabs: Inclusive Capital Partners is looking to sell a stake in Bayer AG, three years after the investment firm led by activist Jeff Ubben first disclosed a holding, according to Bloomberg.
The investor is offering roughly 8.5 million shares in a stock placing arranged by JP Morgan Chase & Co., according to the terms seen by Bloomberg. The stake would be worth €327 million ($379 million) based on the German agriculture and health firm’s closing stock price on Monday, according to Bloomberg calculations.
CEO Bill Anderson has promised to significantly contain the U.S. mass litigation by the end of 2026, Bloomberg notes, with the company having recently secured preliminary approval for a $7.25 billion settlement proposal. However, investors continue to focus on a U.S. Supreme Court decision expected by mid-year that could undermine a key legal theory behind many of the lawsuits.
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