DTN Oil Update

Karim Bastati
DTN Analyst

VIENNA (DTN) -- Oil and product prices rallied Thursday morning after U.S. President Donald Trump said strikes on Iran will intensify over the next two to three weeks and the U.S. is not responsible for reopening the Strait of Hormuz.

Steep backwardation in U.S. crude futures, which have rallied less intensely than Brent throughout the month-long war on the notion that U.S. supplies were more insulated, drove front-month West Texas Intermediate higher than the global benchmark for the first time since 2022.

By 08:35 a.m. EDT, NYMEX WTI futures for May delivery were up $10.25 to $110.37 barrel (bbl). The ICE Brent contract for June delivery rose $7.55 to $108.91 bbl. It was the first such slip between the two benchmarks due to the extreme backwardation in their time structures, reflecting short-term supply concerns. May WTI front-month was about $15 bbl higher than June while June Brent was about $9.5 bbl above July.

Among refined products, RBOB futures for May delivery advanced by $0.1993 to $3.2907 gallon. Front-month ULSD futures soared $0.5295 to $4.5863 gallon.

The U.S. Dollar Index strengthened by 0.512 points to 99.97 against a basket of foreign currencies.

In a televised speech on Wednesday evening, Trump said the U.S. is going to hit Iran "extremely hard over the next two to three weeks," adding "we're going to bring them back to the Stone Ages." The president also reiterated threats to strike Iranian energy infrastructure. At the same time, he said the U.S. didn't "need" the Strait of Hormuz but may assist allies in reopening the waterway, the de facto closure of which has now for five weeks choked the world off a fifth of oil supply. He claimed the strait will "reopen naturally" after the end of the war, for which he presented no concrete plan nor timeline.

The remarks fueled concerns over the current supply crisis deepening and curbed optimism over a ceasefire. The war has over the past few weeks escalated to more energy assets in the region, including oil and gas fields, refineries, terminals and tankers. The longer flows from the Persian Gulf remain at a standstill and the longer the war lasts, the higher the share of disrupted supply which may be permanently lost.

Commercial crude oil inventories in the U.S., meanwhile, continued to expand. The Energy Information Administration on Wednesday reported a stock build of 5.5 million bbl in the week ended March 27, lifting them to 5% above year-ago levels. The EIA also reported U.S. product exports soaring to their highest on record.