Oil Down on U.S. Peace Plan for Iran; Brent Below $100


   
Karim Bastati
DTN Analyst

   VIENNA (DTN) -- Oil futures dropped nearly 5% Wednesday (3/25) morning, with 
Brent back below $100 bbl, on news the U.S. have proposed a 15-point plan to 
negotiate an end to the war with Iran.

   Ceasefire hopes, meanwhile, were scaled back by a fresh exchange of attacks 
between Israel and Iran, and by the mobilization of additional U.S. troops.

   By 08:55 am ET, NYMEX WTI for May delivery was down $3.81 to $88.54 bbl, and 
ICE Brent for May delivery fell $4.59 to $99.90 bbl.

   Downstream, NYMEX ULSD for April delivery slumped 8%, or $0.3755, to $3.9154 
gallon. Front-month RBOB gasoline futures, meanwhile, slid $0.1725 to $2.9755 
gallon.

   The US dollar index softened by 0.242 points to 99.0 against a basket of 
foreign currencies.

   News reports of the White House's 15-point peace plan for Iran, delivered 
via Pakistani officials, was preceded on Tuesday (3/24) by U.S. President 
Trump's claims that Iran had agreed to a concession that he likened to a "very 
big present, worth a tremendous amount of money".

   Iran has not yet accepted the offer, although its Fars news service 
acknowledged that "the U.S. stepped up efforts to secure a ceasefire".  Israeli 
media reported late Tuesday that the 15-point plan will be negotiated during a 
month-long ceasefire, but neither Israel nor Iran has officially agreed to stop 
the ongoing fighting.

   The U.S.-Israeli war on Iran has for the past three weeks shut in a 
significant amount of Middle Eastern crude oil production and exports, leading 
to spiking prices and what the Paris-based International Energy Agency calls 
the largest oil supply disruption in history.

   Yet prices have rallied less than during the first months of Russia's 
invasion of Ukraine, despite physical crude and product supply being much more 
affected this time around. Global inventories at a five-year high have provided 
some cushion. Market participants are also betting on a short-lived conflict 
despite continued exchange of fire between Iran and Israel amid U.S. diplomatic 
overtures.

   The blockaded Strait of Hormuz, the flashpoint of the energy crisis created 
by the war,

   has seen only a handful of oil tankers pass in recent days, after being 
approved by Iran. Most shippers are avoiding the strait after earlier attacks 
by Iran on the waterway that used to provide transit to some 20 million bpd of 
petroleum liquids.

   Even if flows are to resume on the strait in the event of a ceasefire or 
diplomatic settlement, crude production in the region will likely still take 
weeks, if not months, to return to pre-war levels.




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