DTN Oil Update
Oil Rebounds as Fresh Attacks Set Back Peace Efforts
VIENNA (DTN) -- Crude oil futures jumped more than 6% Wednesday morning after new Iranian and U.S. strikes ended a four-day truce which had revived hopes for a diplomatic resolution to the war.
By 08:30 a.m. EDT, ICE Brent for September delivery was up $6.10 to trade near $90.19 barrel (bbl), and NYMEX WTI for September delivery rose $5.46 to $84.72 bbl.
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Downstream, NYMEX ULSD futures for August delivery jumped $0.1828 to $4.3337 gallon, and front-month RBOB futures gained $0.0574 to $3.3919 gallon.
The U.S. Dollar Index remained little changed, up 0.044 points to 101.310 against a basket of foreign currencies.
On Tuesday, Iran carried out a missile attack on a U.S. base in Jordan and fired on tankers in the Strait of Hormuz. U.S. and Saudi Arabian forces on Wednesday launched strikes on Iran-aligned militias in Iraq which had earlier this week attacked Saudi oil infrastructure.
Tehran also reasserted its territorial claims over the Strait of Hormuz, rejecting an Omani proposal for an evenly split control of the waterway on the grounds that inbound traffic should remain entirely under Iran's control. Daily transits through the chokepoint remained in the low single digits Tuesday.
Traffic through Bab-el-Mandeb, meanwhile, continued to pick up the pace. Houthi attacks on tankers last week caused vessels to divert course, threatening yet another vital Middle Eastern oil transit point. Crude oil exports from the Red Sea port of Yanbu have rocketed over the past few months after Saudi Arabia rerouted millions of bpd of crude oil previously flowing to ports in the Persian Gulf, one of the limited options of bypassing the Hormuz blockade.
Commercial and strategic oil inventories have dwindled rapidly during the nearly five-month long supply disruption. U.S. Department of Energy data on Monday showed volumes of crude oil in the Strategic Petroleum Reserve dropping to a more than 43-year low 307.6 million barrels (bbl) last week. Separately, the American Petroleum Institute on Tuesday reported that commercial crude oil inventories fell by 3.3 million bbl in the week ended July 24. If confirmed by U.S. Energy Information Administration data scheduled for release at 10:30 a.m. EDT Wednesday, the draw would leave commercial crude stockpiles at 408.4 million bbl, the lowest for this time of year since 2018, down 4.3% year-on-year and 5.7% below the seasonal five-year average.