DTN Oil Update
Oil Rally Back; IEA Frees Stockpile as US Exports Dip
SECAUCUS, N.J. (DTN) -- Oil prices climbed again on Wednesday after a one-day retreat, as fears over Iran's mining of the already blocked Strait of Hormuz intensified safety concerns over the waterway that serves nearly a fifth of world petroleum shipments.
A historic 400 million-bbl crude reserves release announced by the International Energy Agency (IEA) on Wednesday to mitigate the supply crisis triggered by the U.S.-Israel war against Iran muted some the market's upside. The IEA release is estimated to cover about half of currently disrupted flows.
The crude futures hike was also limited by a 10-month high in weekly U.S. crude stocks reported by the Energy Information Administration (EIA), which cited an inventory build of 443.1 million bbl for the week ended March 6.
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The inventory surge came as U.S. crude exports, typically for European and Asian destinations, dropped by 563,000 bpd week-on-week during that week, the EIA data showed. The slide in U.S. crude exports coincides with a spike in tanker rates that have impacted global oil movements. Charter of Suezmax vessels that carry 1 million bbl on average has reportedly surged 95% to approximately $180,000 per day, while rates for VLCCs with 2 million bbl capacities have hit a record of $460,000 per day.
Producers in the Middle East have throttled 6.5 million bpd of crude output since the outbreak of the Iran war on Feb. 28. While Saudi Arabia's Red Sea hub at Yanbu has doubled loadings to 2 million bpd, operational bottlenecks have limited further diversion from the Hormuz.
Additionally, 5 million bpd of refined products remain stranded in the region following infrastructure damage and refinery shutdowns caused by ongoing Iranian missile strikes.
On the demand front, OPEC maintained a growth forecast at 1.4 million bpd for 2026 in its monthly report for March released this morning.
The oil cartel also said it was too early to determine the impact of the Iran war on the global economy, although it expected its members to step up with more supply. OPEC noted that Saudi Arabia increased output in February to 10.882 million bpd, delivering 10.111 million bpd to the market, with the producer pointing out that the kingdom had proactively hedged against the potential disruptions to supply from the Middle East's latest conflict.
By 2:30 p.m. EDT, NYMEX WTI crude futures for April delivery were up $3.76 to $87.21 bbl. ICE Brent crude for May delivery advanced $4.35, or 5%, to $92.15 bbl.
Downstream, NYMEX RBOB futures for April delivery climbed $0.1460 to $2.7863 gallon, while NYMEX ULSD futures for May soared $0.3302 to $3.6768 gallon.
The run-up in refined product prices was boosted by the latest EIA inventory data showing declines in gasoline and distillate balances.
Gasoline stocks fell by 3.7 million bbl to 249.5 million bbl during the week ended March 6, while distillate fuel oil in holding slid by 1.3 million bbl to 119.4 million bbl.
The U.S. Dollar Index strengthened by 0.401 points to 98.21 against a basket of foreign currencies, moderating the rally across energy markets.
Consumer Price Index (CPI) data indicating that U.S. headline inflation remained unchanged at 2.4% year-on-year in February, matching January's print, did not impact energy prices.