DTN Oil Update
Oil Soars as War Escalation Threatens Diverted Exports
VIENNA (DTN) -- Oil and product futures extended their rise Wednesday morning to near six-week highs as the escalating U.S.-Iran war looked to threaten new oil supply routes in the Middle East.
By 8:50 a.m. ET, ICE Brent for September delivery was up $3.02 to trade near $94.03 bbl, and NYMEX WTI for September delivery rose $2.47 to $86.81 bbl. Both benchmarks rose to their highest since the second week of June.
P[L1] D[0x0] M[300x250] OOP[F] ADUNIT[] T[]
Downstream, NYMEX ULSD futures for August delivery advanced $0.0660 to $4.1926 gallon, and front-month RBOB futures moved higher by $0.0377 to $3.4436 gallon.
The U.S. Dollar Index remained little changed, down 0.076 points to 100.925 against a basket of foreign currencies.
Ship tracking data showed several Saudi Arabian tankers turning around in response to Houthi threats. The Iran-aligned Yemeni militia on Monday announced a blockade of Saudi maritime traffic, and on Tuesday issued warnings to shipping companies worldwide that they will target any vessels within striking range that call for Saudi ports.
Saudi Arabia has in response to the closure of the Strait of Hormuz diverted millions of bpd of crude flows typically exported from the Persian Gulf to its Red Sea port of Yanbu. A successful Houthi blockade of the Red Sea would disrupt an estimated 5 million bpd of crude oil and condensate supply.
Flows through the Strait of Hormuz, meanwhile, dropped to a three-week low, according to a statement from the U.S.-led Joint Maritime Information Center on Tuesday. Not only have visible crossings almost completely ceased, but "dark" tanker traffic in the U.S.-protected corridor along the Omani coast have also slowed markedly.
War-induced oil supply disruptions were also mounting outside of the Middle East. The Caspian Pipeline Consortium on Tuesday halted pipeline transports to its main export terminal on the Black Sea after several drone attacks on loading tankers, removing some 1.2 to 1.5 million bpd of crude oil supply from the market.
The nearly five-month long oil supply disruption has led to plummeting global inventories of both crude oil and products, including in the United States. The American Petroleum Institute on Tuesday estimated that gasoline inventories continued to shrink last week, but reported the first build to crude oil stockpiles in 12 weeks. Official inventory data from the U.S. Energy Information Administration are scheduled for release at 10:30 a.m. ET today.