Brent falls below $100 on reports of US peace proposal to Iran

• Iran says ‘non-hostile’ ships can transit Hormuz
• Brent and WTI lose more than 5%
• Trump says Iran wants ‘to make a deal’

Brent crude slid below $100 a barrel on Wednesday on reports that the US had sent Iran a plan aimed at ending their war and Tehran signalled “non-hostile” vessels could transit the Strait of Hormuz, even as events on the ground pointed to a deepening conflict.

International benchmark Brent futures were 5.4 percent lower at $98.85 by 10:16 GMT, while West Texas Intermediate crude traded at $87.45 a barrel, down 5.3 percent.

US President Donald Trump said in remarks from the Oval Office that the Iranians are “talking to us” and want “to make a deal”. Trump also spoke of an unspecified gift the Islamic Republic gave Washington on Tuesday, which he described as a “very big present worth a tremendous amount of money” that was “oil and gas related”.

The White House transmitted a 15-point peace proposal to Tehran by way of Pakistan, according to the New York Times. 

And according to a statement released to the International Maritime Organization, Iran said “non-hostile vessels” can transit the strait, through which about one-fifth of global oil supplies normally flow. The war has virtually halted shipments of crude through the waterway. 

Chinese shipping giant Cosco told customers it was resuming new bookings for shipments to some Gulf countries, following a suspension due to the conflict.

The restart applied with immediate effect to “general cargo containers for shipments” to the UAE, Saudi Arabia, Bahrain, Qatar, Kuwait and Iraq, the company said in a statement.

On Monday, Trump had committed to pausing strikes on Iranian energy facilities in this fourth week of the conflict amid what he said were ongoing talks between US and Iranian officials. Iran has so far denied that such negotiations are taking place.

The Islamic Republic has ramped up strikes on Arab Gulf states, Israel and beyond, including one in Bahrain which killed a Moroccan contractor for the UAE military and injured other UAE and Bahraini personnel. Kuwait International Airport was also struck overnight.

Israel continued attacking targets across Iran and expanded its offensive in southern Lebanon. Iran told the International Atomic Energy Agency that a projectile hit its Bushehr nuclear power plant, Reuters reported.

The Pentagon, meanwhile, is sending an additional 1,000 troops from the US Army’s 82nd Airborne Division to the Middle East, NBC News reported, citing sources. 

The long-term repercussions of Iran’s effective closure of the strait and attacks on vital energy infrastructure in Qatar, Kuwait and other Gulf states became more apparent on Tuesday.

QatarEnergy said it would be unable to meet some long-term LNG orders from Italy, Belgium, South Korea and China following Iranian strikes on its Ras Laffan facilities, according to Reuters. 

Kuwait Petroleum Corp CEO Sheikh Nawaf al-Sabah told the CERAWeek energy conference in Houston that his company is producing crude only for domestic consumption and that it will take “three or four months” to resume operations fully once hostilities end.  

Further reading:

• Oil drops after Trump says US held ‘productive’ talks with Iran
• Gold slips 3% to four-month low
• The big question in Houston: what does the US want from the Gulf?