DTN Oil Update
Oil Above $100 on Uncertainty Over Next Phase of Iran War
SECAUCUS, N.J. (DTN) -- Crude oil futures settled above $100 bbl Monday as U.S. President Donald Trump's threats of troop reinforcement and destruction of energy plants in Iran offset efforts by Pakistani mediators to de-escalate the Middle East conflict.
The U.S. military has reportedly mobilized tens of thousands of troops in the region, signaling a possible ground offensive by Washington, which wants Tehran to reopen the Iran-bordering Strait of Hormuz that used to serve a fifth of the world's petroleum trade.
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Transit through the waterway remained severely restricted Monday as the month-long conflict between the U.S., Israel, and Iran expanded to include weekend strikes by Houthi forces. These attacks raise concerns that the Yemen-based militia could target the millions of bpd in Saudi crude recently diverted to Red Sea terminals.
"Markets will be watching tanker movements closely in the coming days for signs of de-escalation versus prolonged chokepoint issues," Phil Flynn, energy analyst at Chicago's Price Futures Group, said, underscoring the uncertainty over the next phase of the war.
President Trump has singled out Kharg Island, which serves as the primary export hub for Iranian crude, for potential destruction while eyeing other energy infrastructure targets crucial for the sustenance of the regime in Iran.
Pakistani mediators, meanwhile, are trying to lay the ground for a ceasefire by helping the exchange of messages between the warring sides. Market participants are skeptical of a diplomatic breakthrough as missile fire continues to be traded across the Middle East, even as Islamabad offered to host talks.
With just a day before the end of March trading, U.S. West Texas Intermediate and U.K. North Brent Sea both showed a monthly rise of 44% and quarterly advance of nearly 80% due to mostly higher crude prices since the start of the Iran war on Feb. 27.
In Monday's session, NYMEX WTI for May delivery finished the session at $102.88 bbl, up $3.24, or 3.3%, after reaching a peak of $ 102.88. May Brent settled at $112.78 bbl, up 21 cents, 0.2% after an intraday high at $112.78 bbl.
In refined products, April ULSD futures fell $0.1312 gallon to settle at $4.3643, while front-month RBOB rose $0.1014 to close at $3.3515 gallon.
The U.S. Dollar Index, tracking a basket of foreign currencies, strengthened by 0.348 points to 100.33.