Commodities
Brent falls back below $107 after a report of a Qatar-Pakistan plan to restart US-Iran talks
Crude gave up an early surge to a five-month high on an unconfirmed mediation report, even as Iran's Revolutionary Guard claimed new attacks on tankers near Hormuz.
HedgeWeekly News Desk ·
Brent crude reversed sharply on Tuesday, ending the London session at $106.65 a barrel, down from $108.29 on Monday, after trading above $111 earlier in the day. US benchmark WTI was down about 1% at $97.55 around midday in New York. The turn came after Al-Araby Al-Jadeed, citing unnamed sources, reported that Qatar and Pakistan had put forward a compromise proposal aimed at reviving negotiations between Washington and Tehran.
According to the report, the plan would free $6 billion in interest earned on Iranian funds frozen in Qatari banks and allow confidential, unannounced IAEA inspections of Iranian nuclear sites. The outlet said the US had approved the framework and that Iran had agreed to it earlier. Neither government confirmed it. Newswires carried a denial that a deal was close while saying US-Iran talks were continuing, and Bloomberg reported that a diplomat involved in the negotiations also disputed that an agreement was near.
The military picture did not ease. Iran's Revolutionary Guard said mines laid by its navy had set two oil tankers on fire in the southern Strait of Hormuz, and the UK Maritime Trade Operations centre reported an incident about 121 nautical miles east of Oman around 10:00 GMT. On Monday a Guard spokesman pointed to seven internet cables running beneath the strait and warned that new targets would be unveiled. The US and Iran signed a memorandum of understanding in Islamabad in June, but talks later broke down over security guarantees and freedom of navigation.
Why it matters: oil has become a direct input into central bank decisions over the next two weeks. The Fed meets on October 28, the Bank of Japan ends a two-day meeting on October 30 amid reports it may lift its inflation forecast because of crude, and the Bank of England meets in early November after Tuesday's jobs data strengthened bets on a rate rise. Tuesday's swing of more than $4 shows how much of the price rests on headlines rather than confirmed supply data, so investors will be watching for official confirmation of the Qatar-Pakistan proposal, Iran's offer to reopen Hormuz within seven days, which Foreign Minister Abbas Araqchi said on Sunday was still on the table, and any further vessel incidents.