DTN Oil Update
Oil Mixed After 4-Year WTI High as Trump's Iran Deadline Looms
SECAUCUS, N.J. (DTN) -- Crude futures were mixed on Tuesday on reports a senior U.N. envoy was traveling to Tehran to pursue peace talks ahead of a U.S. deadline for Iran reopen the Strait of Hormuz or face the destruction of key infrastructure.
The bid by Jean Arnault, the personal envoy to UN Secretary-General Antonio Guterres, was viewed as a last-ditch diplomatic effort by the world body to avoid further escalation to the Middle East conflict as a 8:00 p.m. EDT deadline loomed for Iran to meet Trump's demand or face potential attacks targeting power plants and bridges.
Trump has warned since Sunday that the Hormuz, which carries a fifth of world petroleum cargoes, must be reopened if Iran and its population is to survive. "A whole civilization will die tonight, never to be brought back again," the president wrote on his Truth Social media platform on Tuesday. "I don't want that to happen, but it probably will."
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But Trump has also twice postponed his original ultimatum issued to Iran on March 21, leading to speculation that an off-ramp to further escalation was still possible before 8:00 p.m. EDT on Tuesday.
Iran remained defiant to the U.S. threat, with First Vice President Mohammad Reza Aref saying, "the government is ready for all scenarios."
Iranian media, meanwhile, published a counter warning that a number of bridges and roads in Saudi Arabia, UAE, and Bahrain will be regarded closed military zones from 11 p.m. Tehran time until further notice, and that residents and citizens should avoid those areas.
Media reports out of Iran said its military will add the oil facilities of Aramco and Saudi Arabia's Yanbu and UAE's Fujairah pipeline to its targets if its power plants were hit.
"There are just so many moving pieces to this, including a last-minute ceasefire, and I think that's why the market has retraced its highs of the day," said a hedge fund manager in oil.
As of 3:15 p.m. EDT, the NYMEX WTI futures contract for May delivery rose $2.35 $112.95 to $114.76 barrel (bbl), after a four-year high at $116.56. In contrast, ICE Brent for June delivery dropped $0.64 to $109.20 bbl.
WTI's premium against Brent, now above $5 bbl, is at its steepest in 18 years. The spread between front-month May WTI and the immediate subsequent month, June, is at a record high above $15.5 bbl on near-term supply concerns and increased demand for U.S. crude amid the oil supply crisis.
RBOB futures for May delivery rose by $0.0017 to $3.3099 gallon, while front-month ULSD futures climbed $0.1366 to trade at $4.4650 gallon.
The U.S. Dollar Index fell by 0.149 points to 99.665 against a basket of foreign currencies.