DTN Oil Update

Karim Bastati
DTN Analyst

VIENNA (DTN) -- Oil and product futures were mixed in a volatile morning session Monday. They reversed early gains on reports that mediators were seeking to reinstate a ceasefire between the U.S. and Iran before again rising on new threats to Saudi oil exports.

By 8:45 a.m. ET, ICE Brent for September delivery was up $0.52 to trade near $88.62 bbl, and NYMEX WTI for August delivery rose $0.18 to $82.67 bbl.

Downstream, NYMEX ULSD futures for August delivery advanced $0.0813 to $4.1459 gallon, and front-month RBOB futures rose $0.0259 to $3.4186 gallon.

The U.S. Dollar Index strengthened by 0.114 points to 100.7 against a basket of foreign currencies.

Oil prices jumped early Monday in response to this weekend's Iranian attacks on oil tankers and neighboring energy infrastructure as well as to the widening scope of U.S. strikes, but reversed course following comments from the Iranian Foreign Ministry which suggested Tehran was open to return to the negotiating table, coupled with reports that mediators have proposed a 10-day ceasefire to allow for new talks.

The price drop, however, was short-lived as the Iran-allied Houthi militia in Yemen soon after announced they will impose a sea navigation ban on Saudi Arabia. Between late 2024 and 2025, Houthi attacks on ships attempting to cross near the Horn of Africa had led to plummeting traffic through the Suez Canal, forcing shippers to reroute around the Cape of Good Hope. Attacks from Yemen could threaten millions of bpd of crude oil exports which have in response to the closure of the Strait of Hormuz have been rerouted to ports on the Red Sea.

Oil flows from the Middle East have already plummeted with the ceasefire collapse. Ship tracking data showed that only four vessels transited the strait Sunday. During the U.S.-Iranian truce, following the initial wave of leaving laden tankers, an average of 20 to 30 vessels per day traversed the chokepoint, compared to a rate of more than 120 per day before the outbreak of the war on Feb. 27.