Trump officials are considering the possibility of another face-to-face meeting with the Iranian leadership, according to CNN. This is likely to be a quiet reversal towards a previous report that cited Iranian sources and said the meeting would take place on Thursday.
However, the oil market speaks much louder than the headlines.
WTI is now trading at $97.19 from a high of $105.63 shortly after the open. This is a huge range and reflects growing optimism.
The best signals came from Trump himself. He said that Iran called earlier today and was positive about the repercussions. He continues to focus his comments on the nuclear program rather than the missile program or sanctions. Less clear is what will happen with the Strait of Hormuz, but it is difficult to see any kind of quick solution unless Iran reopens it.
It’s not just oil sending positive signals. US stock futures started the day in very negative territory but are now 120 points off the lows, and up 0.6%. The euro rose during the day and Treasury yields fell, reflecting easing concern about inflation problems. Even Bitcoin turned around and rose intraday at $72,000 after falling over the weekend following headlines about the collapse of talks.
As for oil, the concern is that it will be difficult to replace the lost barrels. Every day, about 13 million barrels are not produced or shipped, and rebuilding (at best) will take a long time in a market that may have 1 million barrels of spare capacity per day. Even this may become questionable once the extent of the war-related damage in the Middle East (and Russia) becomes clear.
Right now, the oil market is showing strong signs of relief, although the headlines are yet to arrive.
This article was written by Adam Paton on Investinglive.com.
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