DTN Oil Update

Karim Bastati
DTN Analyst

VIENNA (DTN) -- Oil prices advanced Friday morning, on track for a weekly decline on signs that disruptions to Red Sea oil flows were less severe than originally feared. Despite the move lower, prices were amid a reheating U.S.-Iran war and mounting supply disruptions still eyeing the largest monthly jump since March.

By 07:55 a.m. EDT, ICE Brent for September delivery on its last trade date rose $1.20 to $90.23 barrel (bbl) and the October contract gained $1.54 to $88.42 bbl. NYMEX WTI for September delivery rose $1.27 to $84.86 bbl.

Downstream, NYMEX ULSD futures for August delivery on their last trade day advanced $0.0786 to $4.2880 gallon, and the more-actively traded September contract gained $0.0698 to $4.1989 gallon. RBOB for August and September delivery softened by $0.0221 and $0.0090 to $3.2626 gallon and $3.1223 gallon, respectively.

The U.S. Dollar Index strengthened by 0.444 points to 100.165 against a basket of foreign currencies.

Flows through Bab-el-Mandeb picked up throughout the week after plummeting on Houthi attacks on tankers and an announcement of their blockade of Saudi Arbian maritime traffic. Yet, oil flows through the chokepoint remained below typical levels and traffic through the Strait of Hormuz continued at little more than a trickle.

On Thursday, the Caspian Pipeline Consortium again halted oil loadings at its Black Sea terminal after two tankers were struck by drones. This came just two days after operations resumed following a week-long suspension caused by drone attacks on several ships. Reports emerging Friday morning suggested that CPC was considering indefinitely pausing operations until receiving safety guarantees from other states, affecting some 1.2 million to 1.4 million barrels per day (bpd) of global crude oil supply.

Amid escalating fighting in the Middle East, war-induced refinery outages in Russia and the Persian Gulf, and growing disruptions of vital oil shipping routes, oil prices found themselves on a steep upward trajectory in July. As of Friday morning, crude benchmarks Brent and WTI were trading more than 20% higher than at the beginning of the month, and ULSD futures were up more than 30%.