Feasibility of peace in Gaza drags back global oil prices

The de-escalation of the Israel-Iran conflict and ongoing ceasefire talks in the Egyptian capital city of Cairo that could potentially halt hostilities in Gaza have lowered the geopolitical risk priced into oil prices, dragging Brent back to the $88 per barrel mark. Higher crude supply thanks to Mexico’s U-turn on its export cuts and hotter-than-expected US inflation data have added some bearish sentiment into the markets, with no real macroeconomic or geopolitical upside on the horizon now.

Yemen’s Houthi militias have targeted four ships in a string of missile attacks this week, including the MSC Orion container ship partly owned by Israeli businessman Eyal Ofer, the Greek-operated Cyclades commercial tanker and two US destroyers passing through the Indian Ocean, OilPrice.com reports.

Energy ministers from G7 countries reached an agreement to shut down their coal-fired power plants by 2035, with Germany and Japan expected to do most of the heavy lifting with coal currently accounting for more than 25% of their electricity generation.

As shippers have expressed their concerns regarding the readiness of the TMX pipeline to start commercial operations on May 1, Canada’s CER said there are still six leave-to-open applications left to consider for pump stations and pipeline spreads.

Mexico’s state-controlled oil company Pemex has walked back its crude export cuts for May after both the Salina Cruz and Veracruz refineries suffered fires over the past two weeks, eliminating the necessity to lower May exports by the planned 330,000 b/d.

Reliance Industries, India’s largest refiner, bought a VLCC cargo of Canadian crude from Shell (LON:SHEL) for July delivery, marking the first ever purchase of TMX volumes by an Indian buyer, with reports suggesting the price was set at a $6 per barrel discount to ICE Brent.

As Riyadh builds up its muscle in the metals industry, Saudi Arabia is looking to lock in supply deals to source lithium into its nascent EV battery industry, with media reports suggesting Chile might be the preferred country for future investments.

Turkey is negotiating with US oil major ExxonMobil (NYSE:XOM) to derisk its LNG supply from the usual sellers (Algeria, Qatar, US) and create a “new supply portfolio”, aiming for a 2.5 mtpa LNG term deal should they agree on commercial terms.

Hedge funds and other money managers sold the equivalent of 95 million barrels in the six key crude options and futures in the week ending April 23, the largest weekly drop since October 2023 as lower Israel-Iran war risks led to weaker risk appetite.

According to a PWC report, more than half of the world’s copper mines in Chile, Zambia and elsewhere are in areas exposed to drought risks over the next decades, stoking fears that climate-related disruptions could add to the already bullish case on copper prices.

A consortium led by Norway’s Equinor (NYSE:EQNR) will drill a deepwater exploration well off Argentina’s northern coast, with the Argerich wildcat becoming the first ever deepwater well in the country, potentially opening up an untapped frontier.

Record temperatures across Thailand, the Phillippines, Vietnam and other Southeast Asian countries have brought regional power grids to their limits, with PTT and PetroVietnam looking to procure prompt LNG cargoes to alleviate the pressure.

In a thinly veiled rebuke to China, Australia’s government is set to tighten scrutiny of foreign investment into the mining and refining of critical minerals, having already blocked such a stake purchase into Northern Minerals last year.

The best-performing commodity of 2024 so far, cocoa futures saw their largest intraday drop in 65 years this week, dropping 17% on Monday to $8,930 per metric tonne, after ICE increased margin requirements for market participants.