DTN Oil Update
Oil Slips From Near $120; US Mulls Iran Sanctions Waiver
SECAUCUS, N.J. (DTN) -- Crude futures raced to nearly $120 bbl Thursday before retreating after the White House signaled it may ease sanctions on Iranian oil trade, and consider additional releases from U.S. strategic reserves to bolster global supplies affected by the Middle East conflict.
Energy markets were on the edge earlier in the day from renewed drone attacks by Iran on the oil and gas infrastructure of its neighbors. Tehran struck the world's largest LNG complex, Ras Laffan, in Qatar; a gas field and oil production site in the UAE, two Kuwait refineries and another gas plant in Saudi Arabia.
Those attacks came in response to Israel's strikes on Wednesday, March 18, on Iran's South Pars gas hub, which provides up to 80% of Iranian gas production.
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While none of the facilities targeted by Iran were destroyed, they added to the global strain on energy supplies, already in deficit from Iran's virtual blockade of the Strait of Hormuz, where a fifth of world petroleum cargoes used to pass.
U.S. Treasury Secretary Scott Bessent said the White House had ways to tamp down oil prices that had risen at least 40% since U.S.-Israeli airstrikes on Israel on Feb. 27 triggered a regional contagion. "The U.S. may unsanction Iranian oil on water in coming days," Bessent said, adding that another option would be more reserves release, on top of the 172 million bbl announced from the Strategic Petroleum Reserve last week.
If confirmed, the sanctions waiver would be the first since 2018, when U.S. President Donald President Trump reintroduced an embargo on Iranian oil previously lifted by the Obama administration. Upon returning to office last year, Trump intensified targeting of Iranian energy to pressure Tehran into a new nuclear deal.
A sanctions reprieve would also be a radical pivot by Washington to contain fallout from the three-week U.S.-Israel war against Iran. The White House already surprised energy markets last week by announcing a 60-day sanctions suspension for Russian oil already on water.
Trump also issued a social media post late on Wednesday, telling Israel to cease attacks on Iranian gas and cautioning Tehran not to target Qatar's LNG.
At Thursday's close, NYMEX WTI for April settled down $0.18 at $96.14 bbl, after a session high at $101.48 bbl. May Brent climbed $1.27 to $108.65 bbl, following an intraday peak at $119.11 bbl.
The Iran war has boosted Brent's standing as global benchmark, pushing its premium over WTI to more than $16 bbl at one point during the session. Such a difference had not been seen since 2019.
WTI has also lagged as data from U.S. Energy Information Administration showed domestic crude inventories rising 6.2 million bbl during the week ended March 13 to a near two-year high of 449.3 million bbl.
Among refined products, April ULSD jumped $0.0917 to $4.2895 gallon by 3:00 p.m. EDT. RBOB gasoline dipped by $0.0326 to $3.0659 gallon. The U.S. Dollar Index fell by 0.818 points to 99.055.