DTN Oil Update

Karim Bastati
DTN Analyst

VIENNA (DTN) -- Oil and product futures softened Thursday morning, retreating from the highs reached earlier in the session on reports the U.S. is considering new strikes on Iran.

Near 8:30 a.m. EDT, ICE Brent for June delivery on its last trading day fell $3.92 to $114.11 bbl, after reaching a four-year high $126.41 bbl earlier in the session. The July contract declined $1.40 to $109.04 bbl. NYMEX WTI crude for June delivery was down $2.14 to trade near $104.74 bbl after hitting an intraday high of $110.93 bbl.

Downstream, NYMEX ULSD futures for May delivery softened $0.0490 to $4.1497 gallon, and front-month NYMEX RBOB futures slid $0.0356 to $3.7055 gallon.

The U.S. Dollar Index eased by 0.5 points to 98.325 against a basket of foreign currencies.

A ceasefire, in place since early April, lowered the geopolitical risk premium tied to the two-month-old U.S.-Israeli war on Iran. Oil prices fell in the initial days of the ceasefire on hopes of a resurrection of flows from the Persian Gulf, but have been moving higher over the past two weeks after the U.S. instated a full naval blockade of Iranian maritime trade, prompting Tehran to declare the Strait of Hormuz closed for traffic after a one-day reprieve.

Reports of the U.S. considering extending the embargo propelled front-month Brent futures above $118 bbl by Wednesday's market close, just 30cts shy of its highest closing price since the start of the conflict. Earlier this morning, media reports suggested U.S. President Trump was being briefed on new military options for strikes on Iran, catapulting Brent for June delivery to $126.41 bbl, the highest since the early days of Russia's invasion of Ukraine in 2022. The more actively traded July contract reached $114.7 bbl, the highest since June 2022.

The ongoing supply disruption, which so far has accumulated to more than 3% of global yearly petroleum liquids supply, has put a strain on global inventories and led to a surge in foreign buying interest for U.S. crude oil and refined products. The Energy Information Administration on Wednesday reported petroleum exports last week soared to 14.18 million bpd, pulverizing the 12.88 million bpd record pace, which itself was 700,000 bpd above the previous all-time high, set just the week prior. Crude oil exports reached a historic high of 6.44 million bpd, topping the previously fastest weekly pace by 809,000 bpd, or 14%. Over the past four weeks, crude oil exports from the U.S. clocked in at 5.15 million bpd, up 29% year-on-year.