Morning Highlights: Brent at $110, WTI Hits $116 High as Trump Midnight Deadline Looms; Iran Rejects Ceasefire, Demands Permanent End to War

Tuesday, April 7, 2026

Market Snapshot

Brent (June) $110.67 | WTI (May) $114.73 WTI session high $116.08, a four-week high. WTI continues to trade at premium to Brent reflecting near-term physical scarcity. Saudi Arab Light OSP to Asia at record $19.50 over Oman-Dubai. Trump deadline of 8 PM EST tonight for Iran to reopen Hormuz or face destruction of every bridge and power plant in Iran; Iran rejects ceasefire, demands permanent war end; UN Security Council resolution watered down after China blocks force authorization; Jones Act waiver producing no domestic relief as U.S. fuel exports hit record highs instead.

Bottom Line

Tonight's deadline is the most concrete escalation trigger of the entire conflict and the market is pricing it with appropriate uncertainty - Brent holding at $110 and WTI pulling back from the $116 session high reflects a market that cannot assign confident probability to either outcome. Iran's response to Pakistan's mediation makes the diplomatic path clear: Tehran rejected a ceasefire outright and demanded a permanent end to the war instead, which is a maximalist counter-position that does not meet Trump's minimum ask of Hormuz reopening. The gap between Trump's demand - open the strait by tonight --and Iran's position - we require a permanent and comprehensive war termination - is not a negotiating gap, it is a structural incompatibility that no mediator can bridge in the hours remaining. If Trump follows through on his threat to destroy every bridge and power plant in Iran by midnight EDT, the market opens Wednesday with a supply shock on top of a supply shock. Iranian power infrastructure destruction would accelerate the humanitarian and economic collapse inside Iran but would not by itself reopen the strait - mines still need to be cleared, damaged terminals still need to be restored, and the vessels backed up behind Hormuz still need weeks to clear. If Trump blinks and extends again, the credibility of future deadlines collapses entirely and Iran's calculus hardens further. XAnalysts' Sahdev was right last week: Hormuz is now a political victory question for Iran, and no amount of infrastructure destruction changes that calculus unless it produces a leadership change or a complete military capitulation. The UN Security Council resolution being watered down after China blocked force authorization is the multilateral framework failing at the moment it is most needed. A resolution that cannot authorize force cannot provide legal cover for the coalition mine-clearing and escort operations that Hormuz reopening actually requires. The Jones Act waiver story is the domestic policy failure that compounds the international one. Trump waived the Jones Act expecting fuel to flow from the Gulf Coast to California, Hawaii and the Northeast - instead U.S. refiners shipped record volumes to Asia and Europe where margins are $15 to $20 per barrel higher than domestic markets. The policy tool designed to reduce domestic fuel prices produced the opposite effect because market economics overwhelmed the intended mechanism. CPC exports from Novorossiysk remaining stable despite the Ukrainian attack on adjacent Sheskharis infrastructure is the one piece of supply continuity news worth noting, though Kazakhstan's deputy energy minister confirming stability should be read against the backdrop of a terminal that lost one of three floating moorings in November and has been a recurring Ukrainian target throughout the war.

Top Developments

Trump Midnight Deadline: Open Hormuz or Every Bridge and Power Plant Burns

Trump has given Iran until 8 PM EST tonight to reopen the Strait of Hormuz, threatening to decimate every bridge in Iran and destroy every power plant by midnight EDT if Tehran fails to comply. Iran's response via Pakistani mediation was to reject a ceasefire entirely and demand instead a permanent end to the war -- a maximalist counter-position that does not address Trump's minimum requirement. Iranian forces retain control of the strait through mines, anti-ship missiles and the threat of vessel attacks, none of which are resolved by U.S. airstrikes on power and bridge infrastructure. Markets are holding rather than spiking, reflecting genuine uncertainty about whether Trump executes the threat or extends the deadline for a fourth time.

UN Security Council Resolution Watered Down, China Blocks Force Authorization

The UN Security Council is voting Tuesday on a Hormuz shipping protection resolution, but in significantly weakened form after China opposed authorizing the use of force. The original Bahraini draft under Chapter Seven would have provided legal cover for the multinational mine-clearing and escort coalition that physical Hormuz reopening requires. The diluted version provides diplomatic legitimacy without operational authority, limiting the coalition's ability to act even after a ceasefire. Russia and China's blocking posture at the Security Council has been the consistent structural obstacle to any internationally mandated Hormuz reopening framework throughout the conflict.

Jones Act Waiver Produces No Domestic Relief, U.S. Fuel Exports Hit Record

Trump's 60-day Jones Act waiver, intended to boost domestic coastal fuel shipments from the Gulf Coast to supply-short markets in California, Hawaii and the Northeast, has produced no measurable increase in domestic oil flows. U.S. coastal liquids shipments were virtually unchanged at 1.37 million bpd in March, with Gulf Coast to domestic coastal flows actually declining to 770,000 bpd from 826,000 bpd in February. Instead U.S. fuel exports hit record highs as refiners and ship owners captured superior margins sending product to Asia and Europe, where European gasoil trades above $200 per barrel against U.S. ULSD below $185. Gulf Oil's Tom Kloza noted that skyrocketing freight rates have made the Jones Act distinction largely irrelevant -- all vessels, U.S. and foreign flagged, are being pulled toward higher-margin international routes regardless of the waiver.

CPC Exports Stable After Ukraine Strikes Near Novorossiysk

Ukraine attacked oil loading infrastructure at Sheskharis, approximately 15 kilometers from the CPC terminal near Novorossiysk, igniting fires at four oil product reservoirs and damaging a mooring point. Russia's defense ministry confirmed the strike and the Kremlin noted it was not Ukraine's first attack on CPC infrastructure. Kazakhstan's deputy energy minister Sungat Yesimkhanov said CPC exports remain stable and oil sector operations are continuing normally. The CPC pipeline handles 80% of Kazakhstan's crude exports and approximately 1.5% of global supply. Chevron and ExxonMobil are among CPC shareholders. The terminal previously halted operations for several days after a November attack destroyed one of three floating moorings.

OPEC+ Quota Rise Remains Notional, Saudi OSP at Record

OPEC+'s 206,000 bpd May quota increase agreed Sunday remains largely on paper with Gulf members unable to raise output due to war disruption and Russian production constrained by sanctions and Ukrainian infrastructure damage. Saudi Aramco's record Arab Light OSP of $19.50 per barrel above Oman-Dubai for May Asian delivery -- up $17 in a single month -- reflects the physical reality that Middle Eastern supply has effectively disappeared from the spot market. Energy Aspects called the OPEC+ increase academic and Rystad's Jorge Leon said additional quotas are largely irrelevant while Hormuz remains closed. The next OPEC+ meeting is May 3.