Analyst Brief: Iran Update – 8th April – 09:00 CET – Threadbare ceasefire for a bad deal

Cross-Barrel Analyst Brief: Iran Update – 8th April – 0900 CET – Threadbare ceasefire for a bad deal

– If one is forced to take an opinion on the way forward, then my base case would be price risk starts to build again over the next two weeks. Iran’s 10-point plan looks an unacceptable deal for the US (and almost everybody else) and on that basis means a small chance that transits into Hormuz will be allowed to rise to anything substantial enough to make a dent in the problem.

– Some statements do suggest there will be up to 10-15 ships allowed through per day during negotiations over the next 2 weeks, which would be 10% normal flow. If this does happen, price reactions to the ship-tracking data in the next 48 hours might also prove overly bearish.

– If you are of a similar opinion to above, then various parts of the market now look too weak or have overcorrected, including Brent (and various product) spreads, with Jun/Jul ICE Brent now ‘just’ $5/b. Also the large narrowing in WTI/Brent but sustained Afra rates has also seen WTI move to being rather expensive in NWE.

– Forward gasoil cracks of $35-40/b are far too low given the supply chain issues already baked in for weeks if not months, even were Hormuz to get moving to 50+% of normal flow this week. Same with Sing 10 E/W and jet E/W. The HOGO has massively rebounded and might be worth selling again. EBOB/ULSD shifted $100+/mt in favour of gasoline.

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