DTN Oil Update

Karim Bastati
DTN Analyst

VIENNA (DTN) -- Crude oil futures tumbled more than 6% Monday morning after the U.S. on late Friday halted attacks on Iran after a 13-day bombing campaign. Iran in response announced that it will not carry out any further strikes for as long as the U.S. keeps the pause.

By 8:30 a.m. ET, ICE Brent for September delivery was down $6.38 to trade near $90.40 bbl, and NYMEX WTI for September delivery fell $5.22 to $84.09 bbl.

Downstream, NYMEX ULSD futures for August delivery eased $0.0453 to $4.1353 gallon, and front-month RBOB futures retreated $0.0898 to $3.3061 gallon.

The U.S. Dollar Index edged lower by 0.087 points to 101.215 against a basket of foreign currencies.

Oil prices have rocketed amid the war escalation over the past two weeks, which not only disrupted exports from the Persian Gulf, but also expanded to a new front, threatening oil flows in the Red Sea. While the two-day break in fighting over the weekend eased oil supply woes and raised hopes of a return to the negotiating table, traffic through the Strait of Hormuz remained muted.

Signs of easing supply disruptions also came from the Black Sea, where ship tracking data showed empty tankers heading to Kazakh oil terminals. Operations have been suspended since early last week after several drone strikes on tankers loading at the terminal. The subsequent halt of the CPC pipeline transporting some 1.2 to 1.4 million bpd of crude oil from the Caspian Sea to Novorossiysk led to a backlog of crude forcing producers to throttle output.

Oil supply, however, will be slow to return amid an uncertain quasi-truce between the U.S. and Iran and recent Houthi attacks on Saudi tankers. The four-month long supply squeeze has destroyed oil demand, and soaring prices have weighed on fuel demand and economic growth. Market participants will be parsing several key macroeconomic indicators scheduled for release this week to gauge demand developments. Preliminary readings for second quarter GDP growth in the U.S. and the Eurozone are set to be published Thursday, July 30. Several consumer sentiment reports for both economies, as well as manufacturing PMIs for China, are also on tap this week.