DTN Oil Update
Oil Fails to Stay Above $100 as G7 Mulls Reserve Release
SECAUCUS, NJ (DTN) -- Oil prices settled in the mid- $90 bbl level after hitting nearly $120 bbl on Monday (3/9) as finance ministers from the Group of Seven(G7) announced plans to release emergency crude reserves to offset a disruption in supply caused by the Iran war in the Middle East.
"We stand ready to take necessary measures, including to support global supply of energy such as stockpile release," the ministers said in a statement, referring to the 1.2 billion bbl the G7 held in coordination with the Paris-based International Energy Agency. The grouping of developed countries was planning an initial release of between 300 million and 400 million bbl, reports said.
Crude prices retreated from their highs on reports that Saudi Arabian producers were offering oil on spot markets, in a rare move to fill a potential void in crude supplies.
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NYMEX WTI for April delivery settled up $3.87, or 4%, at $94.77 bbl. It surged 11% earlier to a four-year high of $119.48.
The ICE Brent contract for May closed up $6.27, or 7%, at $98.96 bbl, after a 10% run up to $119.50.
"The bottom line here is that the risk to the supply is still high," said Phil Flynn, analyst at Chicago's Price Futures Group. "Iran, as long as they have missiles, they can create havoc and it's going to be very difficult to get prices to stay down."
In Monday's morning trade, crude prices reached highs not seen since Russia's 2022 invasion of Ukraine on news that Iran had installed Mojtaba Khamenei as supreme leader to replace his slain father, Ali Khamenei, against U.S. wishes.
It was a sign that the U.S.-Israel war against Iran, now into its 10th day, could drag a notion, underscored by Iranian Foreign Ministry spokesperson Esmaeil Baghaei, who said, "as long as attacks continue, there is no point in talking about anything but defense and retaliation against enemies."
Tehran's continuous blockade of the Strait of Hormuz -- where a fifth of the world's oil supply passes -- also underpinned the rally. Reports said only two crude or refined product tankers exited the Persian Gulf on Sunday (3/8), versus the typical daily average of 35 carrying some 21 million bpd petroleum liquids.
Downstream, NYMEX gasoline and ULSD futures reached their loftiest levels since July 2022 before retracing.
Gasoline for April delivery finished up $0.0618 at $2.8084 gallon, after a run-up to $3.2205.
ULSD was the only major component of the NYMEX complex to settle the day in the session in the red, with the front-month contract closing down $0.0358 at $3.5866 gallon, after a peak at $4.4715.
The U.S. Dollar Index was up 0.166 points to 99.145 against a basket of currencies.