DTN Oil Update
Oil Set for Weekly Rise Even as New US Tariffs Weigh
VIENNA (DTN) -- Oil and product futures retreated from recent highs Friday morning as the reimposition of U.S. tariffs fanned demand woes, but were still on track for sizable weekly increases.
By 8:30 a.m. ET, ICE Brent for September delivery was down $3.16 to trade near $97.53 bbl, and NYMEX WTI for September delivery fell $2.70 to $89.49 bbl.
Downstream, NYMEX ULSD futures for August delivery slumped $0.1136 to $4.2280 gallon, and front-month RBOB futures retreated $0.0971 to $3.3933 gallon.
The U.S. Dollar Index edged lower by 0.016 points to 101.270 against a basket of foreign currencies.
Oil prices have soared this week amid an escalating U.S.-Iran war and growing supply disruptions. On Friday, attention shifted to the demand side after the U.S. reinstituted import tariffs on most trading partners. The new duties ranging from 10% to 12.5% amplified concerns about economic growth, and about the additional inflationary pressure making interest rate cuts less likely.
Despite this morning's slump, oil futures were still eyeing considerable weekly gains. Front-month Brent futures were up more than 9% on the week, the fourth consecutive weekly rise. Intensifying U.S. attacks on Iran, the de-facto closure of Strait of Hormuz, dimming peace prospects and the opening of a new front jeopardizing yet another vital oil shipping route had Brent breach the $100 bbl mark Thursday for the first time in two months.
This week's attacks on Saudi tankers by Iran's allies in Yemen threatened to disrupt millions of bpd of crude supply rerouted from the locked-in Persian Gulf to Saudi Arabia's Red Sea port of Yanbu.
Oil supply disruptions were also mounting outside of the Middle East. Ukrainian drone attacks on tankers loading in the Russian Black Sea port of Novorossiysk forced shut loading operations of Kazakh oil, affecting some 1.2 to 1.5 million bpd in exports. The longer operations stay idle, the more Caspian Sea production will have to be curbed given the lack of alternative takeaway options and limited storage capacity.
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