Oil Slides as Ships Move Toward Hormuz -- Commodities Roundup

MARKET MOVEMENTS:

--Brent crude oil is down 5.2% to $94.95 barrel.

--European benchmark gas is down 7.3% to 45.15 euros a megawatt-hour.

--Gold futures are up 1% to $4,570.70 a troy ounce.

TOP STORY:

Oil Slides as Ships Move Toward Hormuz

An agreement between the U.S. and Iran that reopens the Strait of Hormuz to shipping promises to knock down oil prices and ease the upward pressure on costs for transport, manufacturing, food and consumer fuels across the world.

But the full benefits of a deal would be uneven and take time to filter through. It will take a while to clear out the bottleneck in the strait, and shippers said they would need to see an extended period of calm before they are confident enough to sail normally through it.

A U.S. official said Sunday that there is an agreement in principle under which Iran would reopen the Strait of Hormuz, but President Trump indicated a signed deal could take time, and that both sides had to get it right.

OTHER STORIES:

Oil Prices Drop on Prospect of Iran Deal, But Investors Aren't Celebrating Yet

The prospect of a possible peace deal with Iran sent oil prices falling and stock gauges around the world climbing Monday.

The most actively-traded Brent crude oil futures slid more than 5% to below $95 a barrel, the lowest since mid-April. That helped pull European bond yields lower as inflation worries cooled. The dollar weakened.

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Condor Energies' New Uzbekistan Gas Well Lifts Output

Condor Energies reported a jump in production after bringing online a new natural gas well at its project in Uzbekistan.

The Calgary, Alberta-based energy company with active Central Asian operations said Monday that it reached an average daily production of 15,283 barrels of oil-equivalent over the past 72 hours after bringing its Kumli-47 horizontal well into operation.

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Beach Energy Sells Artisan Gas Discovery to Amplitude Energy

SYDNEY--Beach Energy said it agreed to sell its operating interest in the block in the Otway Basin that contains the Artisan natural-gas discovery to Amplitude Energy.

Beach said the deal would deliver cash proceeds of 70 million Australian dollars (US$49.9 million) and a production royalty of some A$3.75 per gigajoule of natural gas. It said the implied transaction value is around A$130 million after tax.

MARKET TALKS:

Crude Futures Retreat as U.S.-Iran Progress Toward Deal-- Market Talk

1415 GMT - Oil futures are lower on optimism about a U.S.-Iran agreement that could reopen the Strait of Hormuz to tanker traffic, but the market remains cautious. "With the two sides still publicly contradicting each other on basic facts, the distance to a binding agreement is considerable," Ahmad Assiri of Pepperstone says in a note. For energy markets, the main concern is uncertainty about the strait. "A verified deal delivers meaningful downside in crude; a breakdown or simply a prolonged stalemate keeps the geopolitical risk premium firmly embedded." WTI is down 5.1% at $91.67 a barrel. Brent falls 4.9% to $98.46. ([e-mail])

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Palm Oil Ends Lower on Weaker Crude Oil Prices -- Market Talk

1010 GMT - Palm oil closed lower on weaker crude oil prices, David Ng, a trader at Kuala Lumpur-based Iceberg X, says. Expectations for slower demand for palm oil in the coming weeks are also adding pressure on prices, he adds. Ng sees support at 4,400 ringgit a ton and resistance at 4,580 ringgit a ton. The Bursa Malaysia Derivatives contract for June delivery fell 14 ringgit to 4,472 ringgit a ton. ([e-mail]; @ivy_jiahuihuang)

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U.S.-Iran Talks Lifted Sentiment But No Agreement Would Quickly Restore Normal Market Conditions -- Market Talk

0937 GMT - The oil market is reacting positively to signs that the U.S. and Iran are moving closer to an agreement, though analysts caution that no deal alone would restore normal conditions in the global system. Traders are anticipating that roughly 100 million barrels of crude currently stranded on tankers near the Strait of Hormuz could begin flowing again relatively quickly, temporarily flooding the prompt physical market and easing near-term supply fears, according to Sparta Commodities. However, "fundamentally there is no change to the underlying picture" June Goh, senior analyst at the firm, says. Even if the strait were to reopen immediately, restoring full production and logistics networks would still likely take three to six months, meaning global markets would continue drawing down inventories until Middle Eastern crude output is fully back online. ([e-mail])

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India's Gold Import Tax Raise Won't Curb Demand -- Market Talk

0933 GMT - India raising import taxes on gold will not curb local demand, Charles Gave of Gavekal Research writes in a note. The move has eroded the value of the rupee against gold, he notes, adding that this will instead encourage locals to buy more gold as savings. The government needs to mobilize India's gold, but "people who have long saved in gold will never abandon gold unless they are paid richly to do so," Gave adds. Gold-linked bonds may support government funding better through principal and interest payments, while maintaining gold levels, Gave says. ([e-mail])

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European Energy Stocks Slide on Falling Oil Prices -- Market Talk

0855 GMT - European energy stocks fall in morning trade as oil prices slip on optimism that the U.S. and Iran could reach a deal that opens the Strait of Hormuz. Nevertheless, President Trump said in a Truth Social post on Sunday that he was in no hurry to agree to a deal. "Both sides must take their time and get it right," he said. Brent crude falls 4.7% to $95.52 a barrel, while WTI futures are down 4.9% to $91.86 a barrel. This pushes Spain's Repsol 2.25% lower and Italy's Eni down 1.9%. France's TotalEnergies is 1.7% down. Norway's Equinor slips 1.4%. U.K. markets are closed. ([e-mail])

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Gold Rises on U.S.-Iran Optimism, Weaker Dollar -- Market Talk

0651 GMT - Gold prices rise on a weaker dollar and optimism that a potential breakthrough in U.S.-Iran peace negotiations could improve the inflation outlook. In early European trading, futures in New York are up 0.8% to $4,558 a troy ounce, while the U.S. dollar index slips 0.2% to 99.01, making dollar-denominated commodities cheaper for overseas buyers. Hopes for a deal that could reopen the Strait of Hormuz also pushed crude oil prices sharply lower, with Brent falling more than 5%. The drop has eased concerns that higher energy costs could reignite inflation and pressure the global economy. Still, gains in gold might remain limited. U.S. consumer confidence weakened sharply in May, while expectations that the Federal Reserve could raise interest rates continue to pressure nonyielding assets. ([e-mail])

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European Gas Prices Down 5% on U.S.-Iran Talks Optimism -- Market Talk

0639 GMT - European natural-gas prices slide on signs that the U.S. and Iran are moving closer to a deal to reopen the Strait of Hormuz. In early trading, the benchmark Dutch TTF front-month contract is down 5.1% at 46.20 euros a megawatt-hour. While optimism over a deal reduces supply concerns, lower TTF prices make Europe less competitive than Asia in attracting LNG cargoes. "The move lower in TTF is unlikely to help the European market attract LNG, with the JKM-TTF spread widening," analysts at ING say. The decline comes at a sensitive time for Europe, which is still rebuilding gas inventories ahead of winter. EU gas storage is currently around 38% full, significantly below the five-year average of 52% for this time of year. ([e-mail])

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Oil Futures Fall Below $100 on Optimism Over U.S.-Iran Talks -- Market Talk

0628 GMT - Oil prices drop back below $100 a barrel on optimism that the U.S. and Iran are moving closer to a peace deal. In early European trading, Brent crude slides 5.2% to $95.04 a barrel, while WTI futures are down 5.8% to $91.02 a barrel. A U.S. official said Sunday that there is an agreement in principle under which Iran would reopen the Strait of Hormuz, though President Trump said he was in no rush to complete an end-of-war agreement and that both sides had to get it right. Analysts say markets reacted quickly, but investors remain cautious since talks could still take days and previous negotiations have broken down. "The market will likely be more cautious about overreacting to these headlines," analysts at ING say. ([e-mail])

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Australian Uranium Miner, Developers Seen as Great Way to Play AI Boom -- Market Talk

0352 GMT - Australian uranium producer Paladin Energy and developers Bannerman Energy and Deep Yellow might benefit from a constructive uranium-price environment amid an artificial-intelligence boom, Macquarie says. Rising power use at AI data centers is boosting demand for uranium-fueled nuclear energy. The bank upgrades its rating on Paladin to outperform from neutral, saying its stock implies a uranium price of US$77 a pound versus the spot price at US$84 a pound. The stock is seen "as an excellent way to invest in uranium cycle/AI megatrend," Macquarie says. The bank also upgrades its rating on uranium producer Boss Energy to neutral from underperform. It says that while it still has concerns about the company's resource downgrades at the Honeymoon uranium project and its new feasibility study on the project, those have been better priced into shares. ([e-mail]; @RhiannonHoyle)

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Iron Ore Gains; China's Steel Output in Focus -- Market Talk

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