Oil Supply Shock Intensifies as U.S.–Iran Talks Signal Potential Restart

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Summary:

The U.S. and Iran may hold another face-to-face meeting; Middle East oil output plunged in March...

Key Highlights

1. The U.S. and Iran may hold another round of face-to-face talks

2. OPEC keeps its global oil demand growth forecasts for 2026–2027 unchanged

3. The U.S. military announces a blockade of the Gulf of Oman and the Arabian Sea, with interception and inspection measures

4. Iran demands war reparations from five Middle Eastern countries

5. The economic impact of the Iran conflict intensifies, prompting energy subsidies in multiple countries

6. The Banque de France estimates Q1 economic growth at 0.3%

7. Middle East oil production plunged in March

Detailed Developments

U.S. and Iran May Resume Face-to-Face Talks

According to U.S. media reports, Washington and Tehran remain in contact following the breakdown of their previous negotiations. The U.S. government is internally discussing the details of a second round of face-to-face talks.

Whether the meeting will take place depends on progress in communications over the coming days, with officials considering potential dates and locations.

A regional source indicated that before Islamabad was selected as the venue for the last round, several alternatives were proposed, including Geneva, Vienna, and Istanbul. Geneva and Islamabad are again under consideration.

Sources also noted that, depending on developments, both sides may extend the current two-week ceasefire to allow more time for negotiations.

OPEC Keeps Oil Demand Growth Forecasts Unchanged

OPEC maintained its global oil demand growth forecasts for 2026 and 2027 at 1.38 million and 1.34 million barrels per day, respectively.

The monthly report projects global oil demand to rise by approximately 1.4 million barrels per day in 2026, with nearly all growth coming from non-OECD countries, particularly China, India, and other Asian economies.

Quarterly projections show demand rising by about 1.5 million barrels per day in Q1, slowing to around 0.9 million in Q2 due to temporary weakness linked to developments in the Middle East, and rebounding to approximately 1.6 million in both Q3 and Q4.

U.S. Military Imposes Blockade in Gulf of Oman and Arabian Sea

In a notice to mariners, the U.S. military stated that any vessel entering or leaving the designated blockade zone without authorization would be intercepted, redirected, or detained.

The measures apply to all vessels regardless of flag. The blockade covers the Gulf of Oman and the Arabian Sea east of the Strait of Hormuz.

The U.S. stated that neutral vessels transiting through the Strait en route to non-Iranian destinations would not be obstructed, although they may still be subject to boarding and inspection for contraband.

Humanitarian cargo, including food and medical supplies, will be permitted but must undergo inspection.

Iran Demands War Reparations from Five Middle Eastern Countries

On April 13, Iran’s permanent representative to the United Nations called on five Middle Eastern countries to compensate for their involvement in the U.S.-Israel war against Iran.

The countries named include Bahrain, Saudi Arabia, Qatar, the United Arab Emirates, and Jordan.

Iran accused them of violating international law and demanded full compensation for both material and moral damages.

Global Economic Impact Deepens; Countries Introduce Energy Subsidies

The economic fallout from the Iran conflict intensified on Monday, prompting more countries to introduce emergency measures to offset rising energy costs.

Nigeria’s finance minister reported gasoline prices had surged by over 50% and diesel by more than 70%, threatening economic stability and requiring international support.

Germany approved €1.6 billion in fuel cost relief through tax cuts, while Sweden launched an $825 million package including fuel tax reductions and increased electricity subsidies. The UK is also expected to announce support measures for businesses facing high energy costs.

The conflict is set to be a central topic at meetings of the International Monetary Fund and the World Bank, both of which have signaled downward revisions to global growth and higher inflation forecasts, with emerging markets expected to be hardest hit.

Banque de France Estimates Q1 Growth at 0.3%

In its monthly outlook, the Banque de France stated that preemptive ordering by businesses in response to expected price increases following the Middle East conflict slightly boosted first-quarter growth.

The central bank estimates Q1 growth at 0.3%, up from 0.2% in Q4, in line with previous forecasts.

Governor François Villeroy de Galhau noted that despite uncertainties stemming from the conflict, France is still expected to achieve 0.9% growth this year.

Based on a survey of 8,500 firms, the central bank reported stable activity in March across industry, services, and construction, with manufacturing supported by strong performance in aerospace, nuclear energy, and defense sectors.

Middle East Oil Production Plunges in March

On April 13, data showed a sharp decline in oil production across the Middle East in March.

The near closure of the Strait of Hormuz disrupted crude exports, forcing several major oil-producing countries to cut output.

According to OPEC’s monthly report, total crude production among its members fell by nearly 7.9 million barrels per day to 20.79 million barrels per day, a drop of 27%.

The largest cuts came from Iraq, Saudi Arabia, Kuwait, and the United Arab Emirates. Iran’s output also declined slightly, while other members such as Algeria, Congo, Libya, and Gabon saw similar trends. Nigeria was a notable exception, with a slight increase in production.

Today’s Key Events to Watch

16:00 (UTC+8) Monthly oil market report by the International Energy Agency

16:00 (UTC+8) Speech by ECB Governing Council member Olli Rehn

16:50 (UTC+8) Remarks by Bank of England MPC member Catherine Mann

18:00 (UTC+8) U.S. March NFIB Small Business Optimism Index

20:30 (UTC+8) U.S. March PPI

22:00 (UTC+8) Speech by ECB Governing Council member Gabriel Makhlouf

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