[MARKET ANALYSIS] Trump touts diesel export ban; US-Iran and Russia-Ukraine talks in focus

Focus for energy markets are three-fold. 1) US President Trump suggesting that he would back a ban on diesel exports. 2) A seemingly constructive bilateral meeting between Trump and Zelensky. 3) US envoys meeting with the Iranian delegation, which has been called “very productive”. On the first point. Trump has touted that he would back a ban on diesel exports, in a bid to ease domestic prices. Treasury Sec Bessent confirmed that officials were assessing the feasibility of either a partial or full ban of exports. This will impact downstream operations, and therefore, the reaction is made evident in the heating oil spread between Europe vs US; currently at USD 36.50/mt, yesterday’s close at USD -56/mt. As for geopolitics, the mood music has been positive on both the Russia-Ukraine, and US-Iran front. On the former, Ukrainian President Zelensky asked Trump to organise a Ukraine-US-Russia trilateral meeting; Trump suggested that Putin is willing to meet. Separately, CNN reported that Ukraine is ready to sign a defence deal with the US this week, but it may be postponed until the US is ready. On the US-Iran front, Trump noted that his top envoys had a constructive meeting with the Iranian delegation. He added that he thinks Iran will do something good. However, some sources familiar with the talks have dampened the recent optimism. Iran has not changed its position, whilst a US source believes that the chance of a deal is limited and major disputes and obstacles remain. Given the optimism surrounding geopolitics, crude benchmarks were initially lower this morning, but have since moved off worst levels to trade with incremental losses/flat. WTI is a touch lower and trades towards the upper end of a USD 88.71-90.52/bbl range, whilst Brent trades with incremental gains in a USD 94.08-96.11/bbl range. Spot gold is trading with losses of around a percent, and currently holds at the lower end of a USD 4,315.51-4,369.56/oz range. The yellow-metal is currently eyeing its 100-DMA (USD 4,313/oz), and further pressure could see gold hit its 50-DMA at USD 4,306.88/oz, ahead of the key USD 4,300/oz mark. Pressure today comes amidst a stronger USD and elevated front-end yields. Elsewhere, base metals are broadly in the red this morning, conforming to the downbeat risk tone. 3M LME Copper (-0.1%) currently holds towards the mid-point of a USD 14,666.28-14,862/t range.