Crude Tumbles as US-Iran Diplomacy Returns to Focus; Gas Inches Up as August Forecasts Average

Crude tumbles as US-Iran diplomacy returns to focus

• The WTI prompt-month contract fell $5.68 to $78.99/Bbl Monday morning (7:45 AM CT)
• President Trump canceled a planned strike on Iranian infrastructure and said the US would resume negotiations with Tehran
• Iran denied that direct talks with the US were underway but said discussions with Oman were making progress toward allowing more vessels to transit the Strait of Hormuz
• Still, Itochu Research Institute’s Takahiro Asaoka said oil prices may struggle to sustain their decline without either a meaningful recovery in Hormuz traffic or a broader diplomatic agreement
• Elsewhere, Kazakhstan’s Energy Ministry said the Caspian Pipeline Consortium (CPC) remained operational following a temporary suspension on Friday
• • Any renewed disruption to CPC loadings would add another source of supply risk as crude flows through both the Strait of Hormuz and the Red Sea remain under pressure

Gas climbs back above $2.80 on average L48 temperatures

• Natural gas is up 5.5c to $2.802/MMBtu (As of 07:32 AM CDT)
• L48 temperatures are falling in line with the 10-year average over the forecast range, with average temps falling around 78°F (Criterion)
• • Weather patterns are unique this year, with a historic super El Niño contending with a strong -PDO
  • • El Niño is bringing western heat, while the –PDO is bringing Midwest heat, with both patterns dulling the regional weather effects of the other (CWG)
  • CWG forecasts August to be 8 CDDs hotter than the 10-year normal
  • • If El Niño continues to strengthen, a cooler than average August is possible

Enterprise announces construction plans in Permian (S&P)

• Enterprise announced plans to construct two more gas processing plants in the Permian Basin
• The processing plants are planned to come online in Q3 ’28 and Q1 ’29, both with 300 MMcf/d of processing capacity