Oil Sunday Brief | April 12

TALKS COLLAPSE, BLOCKADE DECLARED: US-Iran peace talks in Islamabad ended without agreement , with U.S. VP Vance saying Iran refused to commit to abandoning its nuclear weapons path. Hours later, Trump announced an immediate US Navy blockade of the Strait of Hormuz and ordered the interdiction of any vessel that had paid transit tolls to Iran - warning that any Iranian firing on US or civilian ships "will be blown to hell."

HORMUZ ESCALATION: The blockade removes ~2mb/d of Iranian crude exports from global supply and effectively ends any near-term prospect of normalised tanker flows through the strait.

TANKER MOVEMENTS STALL: Three laden VLCCs exited the strait on Saturday in the first significant movement since the ceasefire. By Sunday, two empty tankers attempting to enter the Gulf turned back at Iran's Larak Island checkpoint as the talks collapsed.

IRAN'S POSITION: Iran's state media reported no plans for a further round of negotiations and stated that "until the US agrees to a reasonable deal, there will be no change in the status of the Strait of Hormuz." Iran warned of retaliation for any wrong move in the strait. It's Revolutionary Guards said ​on Sunday that ‌any military vessels attempting to approach the ​Strait of Hormuz ​will be considered a ⁠violation of ​the two-week U.S. ceasefire.

SAUDI PIPELINE RESTORED: Saudi Arabia confirmed full pumping capacity restored on the East-West pipeline at 7mb/d following the April 8 strike. Manifa field production also recovered. Khurais restoration ongoing.

WHAT'S NEXT: The US Navy has begun mine clearance operations in the strait. Trump's blockade is his next move - how quickly it can be enforced, and how Iran responds, will set the tone for oil markets this week. Clearly, tankers and energy infrastructure across the region under immediate threat. Bullish oil drivers ahead.