DTN Oil Update
Oil Futures Drop Amid Renewed Middle East Tensions
HOUSTON (DTN) -- Crude futures dropped on Friday despite escalating U.S. strikes on Iran entering their second day, while tensions over control of the Strait of Hormuz heightened concerns about additional disruptions to global oil supplies.
Iran says the strait should come under its exclusive control and that vessels should begin to pay fees to Tehran. Nearly one-fifth of global oil and natural gas passed through the strait before the war began, the Associated Press reported on Friday.
P[L1] D[0x0] M[300x250] OOP[F] ADUNIT[] T[]
The front-month NYMEX WTI futures contract dropped $0.51 to $71.57 bbl on the day, but increased 2.64% on a weekly basis. Meanwhile, ICE Brent crude futures contract for September delivery dipped $0.24 to $76.06 bbl, 3.79% higher than the average prices reported last week, according to DTN data.
The NYMEX ULSD futures contract for August fell $0.0201 to $3.5515 gallon. NYMEX RBOB gasoline for August slid $0.0453 to $2.99346 gallon.
In contrast, the U.S. dollar index inched up 0.079 points to 100.77 against a basket of foreign currencies.
Oil futures retreated on Friday after the International Energy Agency (IEA) projected global oil demand would decline by 1 million bpd in 2026, marking the first annual decline since 2020.
Global supply rebounded by a sharp 4.1 million bpd to 98.8 million bpd in June following a mid-month ceasefire agreement between the U.S. and Iran. However, overall production remained 9.4 million bpd below pre-war levels after previous hostilities disrupted nearly 14 million bpd of flows, the IEA said in its monthly report.
The IEA warned that the fragile supply recovery could quickly reverse if shipping on the Strait of Hormuz faces more disruptions.
Goldman Sachs noted that energy shipping traffic on the Strait of Hormuz had reached 80% of normal flows by the end of last week as tankers rushed to escape the previously blockaded chokepoint after the June 17 ceasefire between the U.S. and Iran. Both sides declared the pact over on Wednesday as hostilities resumed.
