Oil headed for the biggest quarterly decline since the pandemic as flows through the Strait of Hormuz accelerated following progress on a peace deal, with Morgan Stanley warning of a potential glut.
Brent’s more-active September contact traded above $73 a barrel, with front-month futures down almost a third this quarter — the biggest decline since 2020. West Texas Intermediate was near $70. The Wall Street bank cut its price forecasts for a physical benchmark by a sixth for next quarter, warning that flows through the waterway only need to recover to about 65% of the pre-conflict level for a glut to form.
There have been conflicting signals from Washington and Tehran on the next phase of negotiations to end the four-month war, with the US saying talks are due to begin Tuesday in Doha. Meanwhile, Iran’s foreign ministry said on Telegram that it would send a delegation of experts but ruled out direct negotiations.
Tehran will continue with plans to oversee traffic through the strait, the Islamic Republic’s Deputy Foreign Minister Kazem Gharibabadi said. The nation wants to reach an agreement with Oman to regulate the waterway, but will move forward with its own plans if needed, he said in remarks to state television.
Morgan Stanley said it counted 35 oil and gas tankers exiting the Persian Gulf through the strait on Thursday — the first time the level returned to the 30-to-40 range typical before the conflict started in February. Traffic later slowed over the weekend following an escalation in the conflict and Iran’s attacks on shipping, before picking up since then.
“Markets tend to move on short-term psychology,” Eric Van Nostrand, Lazard chief investment officer, said in an interview with Bloomberg TV on Monday. “The positive vibes around the traffic in the Strait of Hormuz looking a lot better than it did last week compared to the weeks before has a lot of people speculatively positioning for cheaper oil.”
This report is auto generated from the Bloomberg news service. ThePrint holds no responsibility for its content.