Oil Deepens Loss on Iran Sanctions Waiver, Peace Talks


   
Barani Krishnan
DTN Refined Fuels Market Reporter

   SECAUCUS, NJ (DTN) -- Crude futures extended their losses Monday (6/22) as a 
temporary U.S. waiver on Iranian oil sanctions and progress in diplomatic talks 
calmed energy markets rattled over the weekend by Tehran's threat to shut the 
Strait of Hormuz again due to Israeli actions in Lebanon.

   NYMEX WTI for July delivery settled down $1.78, or 2.3%, at $74.82 bbl. The 
front-month contract has unwound approximately 30% of the war premium that 
drove prices to a four-year peak of $119.48 bbl in March.

   That peak followed what the International Energy Agency termed the most 
severe supply disruption in oil history. Prior to the onset of U.S.-Israeli 
airstrikes against Iran in late February, WTI traded near $67 bbl.

   August ICE Brent futures dropped by $2.67, or 3.3%, to close at $77.90 bbl. 
Brent crude traded near $72 bbl before the conflict before surging to an April 
peak of $126.41, its highest level since 2022.

   Downstream, NYMEX ULSD futures contract for July slid $0.0342 to settle at 
$3.0931 gallon, while July RBOB futures edged $0.0064 lower to $2.8970.

   Israel and Hezbollah renewed a fragile ceasefire following violent flare-ups 
in southern Lebanon on Friday that briefly threatened the broader U.S.-Iran 
diplomatic framework. Although the truce largely holds, Israeli military forces 
remain deployed inside Lebanese territory while both nations prepare for 
upcoming trilateral security talks.

   U.S. Vice President JD Vance, meanwhile, reported progress in talks to end 
the Iran war, following a series of late-night discussions among U.S. and 
Iranian delegations, alongside mediators from Qatar and Pakistan.

   The U.S. Treasury Department also officially announced a temporary 60-day 
general license authorizing transactions involving Iranian crude oil, petroleum 
products, and petrochemical products through August 21.

   The newly issued Office of Foreign Assets Control directive permits the 
production, delivery, and sale of Iranian energy commodities, alongside U.S. 
dollar payment processing and shipping insurance services. Under the 
preliminary framework, Iran has committed to maintaining open transit through 
the Strait of Hormuz and allowing international nuclear inspectors back into 
the country.

   The resumption of flows through Hormuz follows more than 100 days of 
separate blockades by Iran and the United States that froze transit of 20 
million bpd of petroleum liquids. Analysts expect a gradual recovery for 
shut-in production, as shippers remain cautious about entering the Persian Gulf 
before a final, permanent agreement is secured.




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