Hormuz talks pulled Brent under 80 dollars as LATAM cut fuel to 147 dollars
Brent fell 5.13 per cent to 79.47 dollars a barrel on 4 August amid conflicting Hormuz-talk accounts. LATAM Airlines cut its third-quarter jet fuel scenario to 147 dollars a barrel and raised adjusted EBITDA guidance.
Economics & Markets··Midday
Brent at 79.47 dollars; Rubio cited progress, Tehran denied direct talks
According to The National, Brent settled on 4 August at 79.47 dollars a barrel, a daily fall of 5.13 per cent. West Texas Intermediate finished the same day at 75.98 dollars, down 5.43 per cent. Brent had last traded below 80 dollars in mid-July, before hostilities resumed; the 4 August settlement marked a return under that mark. The move arrived alongside conflicting public accounts of diplomacy over the Strait of Hormuz. US Secretary of State Marco Rubio said progress had been made in talks with Iran and Oman but that no final agreement had been reached. Iranian officials denied that direct negotiations with Washington were under way and said their only discussions were with Oman, on reopening the Strait of Hormuz. One side described a three-party progress track; the other limited contact to Oman and the reopening agenda. Ahmad Assiri, research strategist at Pepperstone, said investors remained reluctant to price the risk of renewed escalation out entirely, leaving the market largely driven by geopolitical headlines.[1]
LATAM profit fell to 125.2 million dollars as fuel books moved to 147 and 130
In the same window, LATAM Airlines Group's own second-quarter results release showed net income attributable to owners of the parent at 125.2 million dollars, down from 241.6 million dollars a year earlier. Total operating revenue rose 27.6 per cent to 4.18 billion dollars, so the top line grew while profit narrowed. Aircraft fuel expense rose 93.1 per cent year on year, adding more than 800 million dollars of extra cost in the single quarter. Management cut the jet-fuel assumption to 147 dollars a barrel for the third quarter from 170 dollars, and to 130 dollars for the fourth quarter from 150 dollars. The new scenarios remain far above the roughly 90 dollars assumption in the original full-year plan. The same release raised full-year adjusted EBITDA guidance from the 3.8 to 4.2 billion dollars range set in May to 4.1 to 4.4 billion dollars. The airline recorded fuel pressure on the reported quarter while third-quarter fuel is planned at 147 dollars a barrel and fourth-quarter fuel at 130 dollars, both above spot.[2]
79.47 dollars on the screen; 147 and 130 dollars still on the airline book
The two reports show different ends of the same energy-price path in the same 4 August window. On the spot side, Brent settled at 79.47 dollars and West Texas Intermediate at 75.98 dollars, daily falls of 5.13 per cent and 5.43 per cent that put Brent back under 80 dollars. On the diplomacy side, Rubio described progress without a final agreement; Iranian officials denied direct talks with Washington and said only Oman discussions on reopening Hormuz were under way. Assiri said escalation risk had not been fully removed from pricing and that the market remained tied to geopolitical headlines. On the airline side, LATAM booked more than 800 million dollars of extra fuel expense and 125.2 million dollars of net profit in the second quarter, then cut its third-quarter jet fuel scenario from 170 dollars to 147 dollars and its fourth quarter from 150 dollars to 130 dollars while increasing full-year adjusted EBITDA guidance to the 4.1 to 4.4 billion dollars range. Spot settlement and company assumptions still sit on different layers: the screen is below 80 dollars, the planned jet-fuel path is 147 dollars and 130 dollars, and the pre-conflict 90 dollars line remains a lagging reference. Hormuz and conflict headlines bind both the barrel close and the airline fuel book to the same cost regime.[1], [2]
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