Morning Highlights: Oil Prices Decline Amid Progress in U.S.-Iran Negotiations and Broader Market Weakness (April 21, 2025)

Market Snapshot (as of 6:15 am EST)

📉 Brent Crude (June): $66.15/b (–$1.81, –2.7%)

📉 WTI Crude (June): $62.84/b (–$1.84, –2.8%)

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🔹 Crude slips after U.S.-Iran talks show "very good progress"

•     U.S. and Iran begin drafting framework for potential nuclear deal

•     Iranian crude possibly returning to market weighs on sentiment

•     Trump’s Fed criticism and trade war fears add broader market stress

•     OPEC+ still expected to raise output by 411,000 bpd in May

•     PMI data due this week could confirm tariff-driven slowdown

•     U.S. LNG could gain edge in EU trade talks via methane rule exemptions

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Key Market Drivers

1.    U.S.-Iran Nuclear Talks Show Momentum

•     U.S. and Iran made “very good progress” on framework for a potential deal

•     Iranian Foreign Minister says parties will start drafting agreement

•     Could pave way for sanction relief and more Iranian oil exports

📢 “The U.S.-Iran talks seem relatively positive... the immediate implication would be that Iranian crude would not be off the market,” said Harry Tchilinguirian, Onyx Capital Group.

2.    Oil Faces Headwinds from Broader Market Stress

•     Lower liquidity post-holiday magnifies price swings

•     Trump’s criticism of the Fed raised investor concerns

•     Gold rallied to record highs, suggesting growing risk aversion

📢 “Investors may struggle to find conviction in an improving supply-demand outlook,” said Yeap Jun Rong, IG.

3.    OPEC+ Output Increase Still on Track

•     Group expected to raise production by 411,000 bpd starting May

•     Kazakhstan, Iraq, and others to offset overproduction with compensatory cuts

•     Supply side pressure mounting despite weak demand backdrop

4.    U.S. Tariffs Cloud Economic Outlook

•     Median recession probability for the U.S. in the next 12 months now approaching 50%

•     PMI data due this week could show continued softness in manufacturing and services

📢 “This week’s PMI releases could underscore the economic impact of tariffs,” said IG’s Yeap.

5.    EU Seeks LNG Deal to Avoid U.S. Tariffs

•     European Commission exploring flexible compliance with EU methane rules to ease tensions

•     Could make U.S. LNG more competitive vs. Russian/Algerian gas

•     Trade deal could include energy commitments from the EU

📢 “The EU methane law could give U.S. LNG an advantage... but exporters are warning of compliance difficulties,” sources told Reuters.

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🔍 Market Outlook: Risk of Iranian Oil Return Adds to Headwinds

🔹 Key Factors to Watch:

•     Will U.S.-Iran negotiations result in sanctions relief?

•     Can oil prices hold $65–$70 despite tariff drag on demand? 

•     Will U.S. economic data confirm slowing growth? 

•     How will OPEC+ balance new supply vs. demand erosion?

•     Will LNG trade smooth broader U.S.-EU tariff tensions?