Recap: The oil market posted an outside trading day as the market weighed contradictory statements in regards to talks between the U.S. and Iran against comments by Qatar and U.S. Treasury Secretary Scott Bessent that raised hopes for a diplomatic resolution. The crude market retraced Monday’s losses in overnight trading and rallied to a high of $82.33 as Iran’s Foreign Ministry spokesman Esmail Baghaei rejected U.S. President Donald Trump’s claim, saying no negotiations with the U.S. were taking place or scheduled. However, the market erased its gains and sold off sharply after Qatar’s Foreign Ministry spokesperson said efforts to secure a diplomatic resolution were continuing, with mediators including Qatar, Pakistan and Oman coordinating to facilitate negotiations. Qatari officials said a potential U.S.-Iran resolution has been drafted. Also, U.S. Treasury Secretary Bessent said a deal with Iran to reopen the Strait of Hormuz could come as soon as Tuesday or Wednesday. The market sold off to a low of $75.16 by mid-day. It later settled in a sideways trading range during the remainder of the session. The September WTI contract settled down $4.57 at $75.77 and the October Brent contract settled down $4.41 at $79.36. The product markets ended the session lower, with the heating oil market settling down 10.67 cents at $3.7705 and the RB market settling down 11.45 cents at $2.8522.
Technical Analysis: The oil market will remain headline driven as it waits to see if there is a diplomatic resolution to the conflict. The market will wait for further developments on the news of a possible U.S.-Iran draft resolution. The market is seen finding support at $75.16, $72.51, $70.68, $68.61, $67.82 and $67.12. Meanwhile, resistance is seen at $82.33, $83.47, $86.87 to $87.68, $92.83 and $93.50.
Fundamental News: According to the UKMTO maritime security agency, a cargo vessel reported being struck by an unidentified projectile near the Strait of Hormuz off Oman’s coast. Maritime sources said that the vessel struck near Hormuz was a dry bulk ship. Its crew had to abandon the vessel and one seafarer was missing.
Kpler data showed that traffic through the Strait of Hormuz remained slow, with three tankers and three bulk carriers among the six vessels transiting the strait on Monday, down from seven the previous day.
Goldman Sachs said it expects Brent crude to remain in an $80 to $90/barrel range until there is either confirmation of a new U.S.-Iran nuclear deal or a significant escalation in attacks. The bank also assumes a fair value of Brent spot prices at around $80/barrel, suggesting the market prices only a moderate risk premium.
The White House is expected to extend a waiver of the Jones Act in the coming days, reaching for one of the few tools it has to try and hold down gasoline prices as President Donald Trump escalates his attacks on Exxon Mobil and Chevron for making “too much money.” The Jones Act requires cargo moving between U.S. ports to be carried on ships built in the U.S., owned by U.S. companies and crewed by American workers, and the waiver aims to lower gas prices by increasing shipping flexibility and reducing transport bottlenecks. The current waiver is set to expire on August 16th and has already become the longest suspension of the Jones Act rules in the program’s history. The exemption has been used nearly 200 times over four and a half months through the end of July.
Early Market Call – as of 9:10 AM EDT
WTI – Sep $75.88, up 74 cents
RBOB – Sep $2.8364, down 31 points
HO – Sep $3.7677, up 3.78 cents
