DTN Oil Update

Karim Bastati
DTN Analyst

VIENNA (DTN) -- Oil prices edged higher Monday after U.S. President Donald Trump threatened to "blow up and completely obliterate" Iran's energy infrastructure if a deal is not reached soon to end the Middle East conflict.

Tanker traffic through the Strait of Hormuz continued at a trickle as the month-long U.S.-Israel war against Iran widened over the weekend with Houthis in Yemen launching attacks on Israel. The Tehran-linked militia had in the past targeted ships near the Red Sea and could pose a threat to millions of bpd of crude exports Saudi Arabia has rerouted to its Red Sea port.

The U.S. has mobilized tens of thousands of troops in what some observers deemed a possible preparation for a ground offensive. Trump on Sunday said that the U.S. could "take Iran's oil" and seize Kharg island, Iran's major oil export hub. The president had previously extended a moratorium on attacks on the country's energy infrastructure until April 6.

While he has used tough language, Trump has also claimed significant progress in peace talks with Iran. Tehran has denied there were such talks, although it acknowledged an exchange of messages via Pakistan which has stated its willingness to be a mediator in talks proposed this week. Market participants are, meanwhile, awaiting evidence that a truce will be reached soon.

Oil prices have risen sharply since the start of the conflict on Feb. 27, with Brent futures on track for their largest monthly increase on record. As of Monday morning, front-month Brent futures have appreciated by close to 60% so far in March.

At 9:05 a.m. EDT, NYMEX WTI for May delivery was up $1 to $100.64 bbl, after a session high of $103.38. Brent for May delivery rose $2.30 to $107.62 bbl after a session peak at $116.89 bbl.

On their penultimate trading day for March, ULSD futures for April delivery advanced $0.0568 to $4.5523 gallon, and front-month RBOB futures edged higher by $0.0267 to $3.2768 gallon. The contracts for May delivery rose by $0.1136 gallon and $0.0464 gallon, respectively.

The U.S. Dollar Index strengthened by 0.153 points to 100.135 against a basket of foreign currencies.