Yesterday's 15-18% drop in oil prices was the largest since the COVID pandemic and had a major impact on vegetable oil and wheat prices
The announcement of a ceasefire and the start of negotiations between the US and Iran yesterday led to a historic drop in oil prices. June Brent crude futures fell 15% yesterday to $95/barrel (+35% since the start of the war), while May WTI crude futures fell 20% to $94.2/barrel (+45% since the start of the war).
However, by the evening, prices had risen by $2-3/barrel amid Iran's threats to resume its blockade of the Strait of Hormuz until Israel stopped shelling Hezbollah in Lebanon. In addition, oil terminals in Iran were attacked by unknown drones and aircraft, which was presumably the UAE's response to Iran's nightly shelling of its oil terminals on the night of the declared ceasefire.
Talks between the US and Iran will be held in Pakistan on April 10-11, and it will be clear then whether the parties have reached an agreement. Meanwhile, Trump said that all US troops deployed to the region will remain there until a peace agreement is reached.
There was another outbreak of speculative insider trading yesterday. Some investors bet $950 million on a drop in oil futures two hours before Trump announced a truce with Iran, which traders estimate made them several billion in profits.
Iran said yesterday it would limit the number of ships that can pass through the Strait of Hormuz to 12 per day and impose a fee for passage in line with the ceasefire agreement. Only 4 ships passed through the strait yesterday, the lowest figure in April, as on other days of the month up to 10, and sometimes even 20, ships passed through the strait per day.
More than 800 ships are stranded in the Persian Gulf, and more than 1,000 ships are waiting to transit on both sides of the strait. Before the war, an average of 135 ships passed through the strait per day.
According to the EIA report, US crude oil inventories rose to a 2.75-year high, with crude oil inventories at Cushing, the delivery point for WTI futures, rising to a 20-month high, indicating a high supply of oil in the US market.
According to Vortexa, crude oil stocks on tankers idle for at least 7 days decreased by 3.9% to 130.25 million barrels in the week ending April 3, which is still 50% higher than the average before the war.
The collapse in oil prices has increased pressure on agricultural crop prices, primarily vegetable oils. May soybean oil futures on the Chicago Mercantile Exchange fell 3.3% to $1,487/t yesterday, while palm oil on the Bursa Malaysia exchange fell 3.9% to a 2-week low of 4,586 ringgit/t or $1,154/t.
On the Chinese exchange in Dalian, the most active soybean oil contract fell by 3.07% yesterday, and palm oil fell by 4.36%.
May wheat futures on the Chicago SWOT fell by 3.1% to $214/t, canola by 2.1%, and rapeseed by 1.8%.
Today, markets will await updated global grain balances from the USDA and further news from Iran.
