France and Italy have opened talks with Iran as they reportedly seek to negotiate a deal to guarantee safe passage for their ships through the Strait of Hormuz.
Reuters cited a Financial Times report on Friday, which stated that the two countries have opened channels of communication with Iran, but Italy did not confirm the report.
Shipping in the Gulf and along the narrow Strait of Hormuz, which carries around a fifth of the world’s oil, has come to a near standstill since the United States and Israel began strikes on Iran on February 28, sending global oil prices surging to highs not seen since 2022.
What the report is saying
France is one of the European nations involved in talks with Tehran, while Italy had sought to make contact with the Iranians, the report stated.
An Italian foreign ministry source denied the report.
- “In their diplomatic contacts, Italian leaders want to favour the conditions for a general military de-escalation, but there is no under-the-table negotiation aimed at preserving only some merchant ships at the expense of others,” the source said.
- A French official, speaking on condition of anonymity, said France had channels of communication with Iran that are still open, but would not confirm or deny the story.
- The Élysée, the official residence and office of the President of France, did not respond to a request for comment.
According to Reuters, France is deploying about a dozen naval vessels, including its aircraft carrier strike group, to the Mediterranean, Red Sea and potentially the Strait of Hormuz as part of defensive support to allies threatened by the conflict in the Middle East.
Backstory
Brent crude was trading at $101 per barrel on Friday morning, and West Texas Intermediate was trading at $95, both slightly down from Thursday’s close but higher than at the start of the week.
Amid the market volatility caused by Middle East tensions, Nairametrics reported on Friday that Nigerian crude oil prices were on track for a significant weekly gain despite a brief dip following the announcement of a 30-day sanctions waiver on Russian crude stuck on tankers.
This is as the US President Donald Trump administration seeks to ease an increasingly serious-looking supply tightening.
- Bonny Light has risen above the psychological $100 per barrel threshold due to a volatile mix of supply disruptions and geopolitical tensions.
- There is a high level of volatility in the pricing of Nigerian crude oil, which is measured against Brent, a major crude oil benchmark.
What you should know
Washington’s sanctions waiver on Russian oil follows an admission by the International Energy Agency that the war in the Middle East is creating the largest supply disruption in the history of the global oil market.
- The admission about the severity of the supply situation was accompanied by the announcement that the IEA would release a total of 400 million barrels of crude to cushion the oil shortage’s impact on the global economy. This is the highest volume of emergency oil releases in history.
- The United States said it would contribute 172 million barrels of that total, reversing an earlier position that it had no plans to tap the Strategic Petroleum Reserve to fill any global supply gaps.
Some market participants are worried about this reversal since the SPR is at a historic low in reserves, raising questions about future oil demand once the crisis subsides and storage needs to be refilled.
