Main developments
Iran circulated a letter to member countries of the International Maritime Organization saying “non-hostile vessels” could transit the Strait of Hormuz “in co-ordination with Iranian authorities”.
Brent slid 6.5 per cent to $97.66 a barrel on Wednesday following reports the US had sent a potential peace plan to Iran. West Texas Intermediate, the US benchmark, dropped more than 4 per cent.
Donald Trump said Iran was “talking sense” in negotiations that were continuing ahead of a Friday deadline set by the US president for a deal to end the war.
The Pentagon is planning to deploy elements of the Army’s 82nd Airborne Division, which specialises in parachute assault, to the Middle East, according to two people familiar with the matter.
Israeli officials threatened to escalate their offensive against Hizbollah, with a particular emphasis on a major ground manoeuvre further into southern Lebanon.
Damage to Qatari gas production to raise long-term prices, says Goldman
Goldman Sachs has said long-term damage to natural gas infrastructure in Qatar means there will be longer-term constraints on global supply that will raise prices.
“We have had long-term damage to Qatari natural gas production capacity,” said Samantha Dart, co-head of global commodities research at the bank.
Dart noted that lost natural gas is more difficult to replace than oil. “When it comes to LNG there are no reroutes, there is no SPR, there is no spare capacity that the market can leverage,” she said. “It’s a loss that needs to be offset by a destruction in demand.”
Asian natural gas prices had risen faster than those for Europe, which has helped incentivise more shipments to Asia, Dart said.
ASX derivatives market set for largest trading month on record
Australia’s listed derivatives market is set for its largest month of trading on record as investors rush to manage energy price and interest rate exposure.
Data released by the Australian Securities Exchange pointed to frenetic trading activity since the beginning of the Iran war across futures and equity markets. Futures volumes have surpassed 28mn contracts in March, beating the previous monthly record set in March 2020 as the Covid-19 pandemic set in.
Ben Jackson, general manager of trading operations at the ASX, said: “The surge in trading activity comes amid escalating geopolitical tensions in the Middle East, renewed oil price volatility and ongoing speculation over the path of domestic interest rates.”