DTN Oil Update
WTI Back Above $60 as Trump Warns Iran of US 'Armada'
SECAUCUS, N.J. (DTN) -- Crude futures jumped 2% Friday, Jan. 23, recouping most of the previous session's loss, after President Donald Trump warned that U.S. warships were headed for Iran, reigniting supply concerns in the event of a conflict in the world's largest oil producing region.
"We have an armada ... heading in that direction, and maybe we won't have to use it," Trump was quoted telling reporters aboard Air Force One. "I'd rather not see anything happen, but we're watching them very closely."
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Iran has been rocked by mass demonstrations against the leadership of the Islamic republic and thousands of deaths reported by human rights groups monitoring the government's response. Trump has warned Tehran in recent weeks that the U.S. might intervene if the regime there continued killing people.
Trump latest threat against Iran came as he left the World Economic Forum in Davos, Switzerland, where he had cooled geopolitical tensions barely 48 hours earlier by saying the U.S. would not attempt to take Greenland by force, as feared by many.
Iran is OPEC's fourth-largest oil producer with a steady output of approximately 3.2 million bpd. Roughly 20 million bpd of crude oil and petroleum products transit the Strait of Hormuz straddling Iran, representing about 20% of the world's total liquid fuel consumption and about of two-thirds of Middle East production led by Saudi Arabia.
The escalation of risks to oil supply put crude futures back into bullish mode after a 2% tumble on Thursday, Jan. 22. That selloff was fueled by glut concerns reinforced by surplus predictions for this year by the Paris-based International Energy Agency (IEA) and the latest weekly builds in U.S. oil inventories reported by the Energy Information Administration (EIA).
The IEA maintained an oversupply prediction of 3.7 million bpd for 2026, forecasting rapidly building global inventories in the first quarter. The EIA reported across-the-board increases in U.S. inventories, led by a 3.6 million bbl crude build last week that came on top of a prior weekly increase of 3.3 million bbl.
In Friday's morning trade, NYMEX WTI crude futures contract for March delivery was up $1.14, or 1.9%, to 60.50 bbl. The ICE Brent crude contract for March surged by $1.15, or 1.8%, to $65.21 bbl.
Among refined products, NYMEX ULSD futures for February delivery rose by $0.0243 to $2.3911 gallon, while front-month RBOB moved up by $0.0195 to $1.8582 gallon.
The U.S. Dollar Index was little changed, declining by 0.068 points to 98.09 against a basket of currencies.