Oil Reverses as Reports Emerge of Iran-US Backchannel Contact

Crude prices retreat on signs of Iran–US backchannel communication

• The WTI prompt-month contract slipped $0.22 to $74.34/Bbl on Wednesday morning (7:30 AM CT)
• Oil erased earlier gains after reports that Iran had indirectly contacted the US in an effort to de-escalate the Middle East conflict
• Despite the diplomatic signal, the war continues to threaten energy flows through the Strait of Hormuz, with attacks across the region triggering a wave of production and export disruptions
• Satellite data firm Kayrros reports that major Saudi oil storage facilities are filling rapidly as shipments remain constrained while the Hormuz route stays largely closed to tanker traffic
• • As of March 1, the Ju’aymah export terminal on Saudi Arabia’s east coast was nearing its remaining storage limits
• President Trump said Tuesday that the US International Development Finance Corporation would provide insurance guarantees for vessels moving through the region and that naval escorts could be deployed “if necessary”
• • Industry participants view the proposal as only a partial mitigation, however, noting that few operational details have been released and security risks for shipping remain elevated

Natural gas prompt month is down -12.7c to $2.927/MMBtu. (As of 07:30 AM CT)

• Forecasted temperatures moved warmer today, erasing 12 Bcf of the 26 Bcf of forecasted demand over the two-week period
• • There was still losses in the northest, primarily in the 1-5 day range, but this was more than offset by gains in the Midwest, South Central, and Western regions (Criterion)
• LNG feedgas demand recovered 0.7 Bcf/d this morning to 19.8 Bcf/d as flows returned to Cameron LNG
• Heating degree days are limited with the warming weather
• • Next week’s average temperatures rise to over 56 °F, still not quite warm enough to shift to Cooling degree days

NextDecade targets first LNG in H1 2027 (S&P)

• The company continues to advance construction of its Rio Grande LNG Trains 1-5 in preparation for first LNG by H1 2027
• The project is expected to add roughly 4 Bcf/d of LNG production capacity, with plans to double this capacity in the future
• This project will help satisfy the buildout of LNG feedgas demand over the next 4 years, with the US on pace to add around 8 Bcf/d of export capacity by the end of the decade