Oil little changed as market weighs Trump threats, ceasefire proposal
Oil prices remained relatively stable on Monday, as concerns over escalating conflict in the Middle East were contrasted with hopes for a potential ceasefire between the U.S. and Iran.
The U.S. West Texas Intermediate contract for May saw a decrease of approximately 82 cents, settling at $110.72 per barrel by 10:23 a.m. ET. Meanwhile, the international benchmark Brent crude prices dropped 69 cents to $108.34 per barrel.
Mediators from Pakistan, Egypt, and Turkey have put forth a proposal for a 45-day ceasefire between the U.S. and Iran.
However, a White House official informed CNBC that President Donald Trump has not yet approved the proposal, stating that it is one of many ideas being considered. The news was initially reported by Axios.
President Trump has given Iran a deadline until Tuesday to reopen the Strait of Hormuz, threatening attacks on power plants and bridges if they fail to comply. In a recent social media post, Trump warned that Iran would face severe consequences if they do not act.
Subsequently, Trump hinted at a significant event scheduled for Tuesday at 8:00 p.m. Eastern Time, without providing further explanation.
Iran’s actions have effectively closed the vital Strait of Hormuz, disrupting the flow of oil tankers and impacting global markets. Prior to the conflict, approximately 20% of the world’s oil supply passed through the Strait.
The closure of the Strait has led to the most significant disruption in oil supply history, resulting in a surge in prices for crude oil, jet fuel, diesel, and gasoline.
President Trump’s recent national address indicated that the conflict is expected to continue for several weeks, with an estimated loss of nearly 1 billion barrels of oil and refined products by the end of the month.
TD Securities forecasts a substantial loss of up to 600 million barrels of crude oil and around 350 million barrels of refined products as the conflict prolongs.
Rapidan Energy projects a net loss of 630 million barrels of oil and products by the end of June, accounting for redirected flows through pipelines, emergency stockpile releases, and inventory drawdowns.
Despite the agreement by OPEC+ members to increase production in May, reaching global markets remains uncertain with the continued closure of the Strait.
Kuwait Petroleum Corporation reported drone attacks on its operational facilities, resulting in significant damage.
OPEC+ cautioned that repairs to energy infrastructure damaged by Iranian attacks are costly and time-consuming, impacting overall supply availability.
The eight members of OPEC+ include Saudi Arabia, Russia, Iraq, UAE, Kuwait, Kazakhstan, Algeria, and Oman.
— CNBC’s Megan Cassella and Anniek Bao contributed to this report.
