DTN Oil Update
Oil Hits 6-Week High as Trump Threats Escalate Iran War
SECAUCUS, N.J. (DTN) -- Crude futures settled near six-week highs Wednesday after U.S. President Donald Trump threatened to bomb civilian infrastructure in Iran if Tehran continued to target commercial shipping in the Strait of Hormuz. Iran, meanwhile, pledged a commensurate response to any aggression on its soil.
The waning chance of a deescalation in the conflict, along with U.S. inventory data indicating gasoline stocks at near eight-month lows, sent energy prices rallying broadly for a fourth consecutive session.
P[L1] D[0x0] M[300x250] OOP[F] ADUNIT[] T[]
NYMEX crude for September delivery settled up $2.49 at $86.83 barrel (bbl), after touching a six-week high at $88.61.
ICE Brent for September delivery closed up $3.06 at $94.07 bbl, after peaking at $95.47, a level last seen in late May.
Among refined products, ultra-low sulfur diesel for August delivery on NYMEX finished up $0.0222 at $4.1488 gallon. NYMEX RBOB for August advanced $0.0088 to end the session at $3.4147 gallon.
Energy markets added to their upward momentum after Trump announced in a social media post that Iran's civil infrastructure will be targeted for every attack on traffic in the Hormuz. Iran's Foreign Minister Abbas Araghchi pledged an "eye-for-an-eye" response.
"While some ships have moved through the Strait the past 24 hours, tracking has not picked up on any oil or LNG tankers," BOK Financial observed in a note to its clients.
Aside from disruptions on the Hormuz, Houthi militia threats have prompted several Saudi Arabian oil tankers to reverse course away from Red Sea shipping lanes.
Outside of the Middle East, Caspian Pipeline Consortium export operations remained halted after drone strikes damaged loading tankers at its Black Sea terminal. The CPC pipeline outage continues to remove an estimated 1.2 million to 1.5 million barrels per day (bpd) of crude oil from global market availability.
On the U.S. inventory front, the Energy Information Administration (EIA) reported crude stocks rose by 2 million bbl to 411.7 million bbl during the week ended July 17. For the year though, crude stocks remained down 7.3 million bbl.
Gasoline balances increased by 800,000 bbl to 211.3 million bbl, staying near lows last seen in November and 8.6% below last year's level, the EIA said. Distillate fuel inventories rose 1.4 million bbl to 109.6 million bbl, but remained 300,000 bbl below year-ago levels.