Crude plummets as US-Iran deal eases supply concerns
The WTI prompt-month contract fell $4.76 to $80.12/Bbl on Monday morning (7:41 AM CT)
The US and Iran announced an interim agreement aimed at restoring commercial traffic through the Strait of Hormuz
Iran’s state-affiliated Fars news agency reported that vessels will be permitted to transit the waterway without restrictions for 60 days, after which Tehran plans to impose “navigation service” fees
Despite the announcement, shipping industry participants cautioned that several aspects of the agreement remain unresolved before normal maritime operations can fully resume
The shipping association BIMCO said additional clarity is needed on security arrangements and implementation details before the route can be considered low risk
“The market often views a reopening as an immediate event, but the reality is far more gradual,” said Haris Khurshid
He added that while oil shipments may recover relatively quickly, rebuilding confidence among shippers and insurers is likely to take considerably longer
Gas falls as power demand is crushed
Natural gas is down -4.1c to $3.079/MMBtu (As of 07:41 AM CDT)
Power burns slid over 7.1 Bcf/d from Friday down to 38.1 Bcf/d (Criterion)
Weather forecasts were mixed this morning, lead by cooling in the Midwest partially offset by warming in the West (CWG)
Texas grid operator forecasts new record peakload (S&P)
ERCOT forecasted a potential 90.4 GW peak this summer, exceeding the current record by almost 5 GW
In terms of weather, the closest summer to this one has been 2023, which had low wind output and hot weather
Some models show most of Texas likely to have temperatures 1-4°F higher than average
Since June began, ERCOT wind generation has been relatively average (CWG)
Non-weather factors like population growth and data center build out also are contributing to load growth in ERCOT
A framework peace deal has been announced between the US-Iran
This has little to no effect on prompt gas, but may dissuade some Permian associated gas growth in the medium to long term
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