DTN Oil Update

Barani Krishnan
DTN Refined Fuels Market Reporter

SECAUCUS, N.J. (DTN) -- Crude and oil product futures rallied Monday after Iran warned it was adopting a new offensive stance over the Strait of Hormuz, threatening an escalation of hostilities in the region unless its demands were met by the United States.

NYMEX WTI crude for September delivery rose $2.10, or 2.55%, to settle at $84.50 bbl. ICE Brent crude for October delivery gained $2.35, or 2.65%, to close at $90.87 bbl.

Downstream, NYMEX ULSD for September delivery climbed $0.1542, or 3.60%, to close at $4.4371 gallon. NYMEX RBOB for September advanced $0.0860, or 2.70%, to finish at $3.2701 gallon.

By 3:25 p.m. EDT, the U.S. Dollar Index slid 0.039 points to 99.52 against a basket of currencies.

The upward momentum across oil and product futures came as senior Iranian officials announced a pivot in Iran's prior defensive posturing over the Hormuz, in a bid to force Washington's hand in ending a maritime blockade on Iranian ports. The White House countered Tehran's move by vowing to double down on its maximum pressure campaign on Iran, signaling the potential for heightened ideological and military clashes.

Diplomatic lines between Washington and Tehran have been strained since the breakdown of a ceasefire agreed in July, with Iranian officials dismissing third-party mediation as ineffective. Tehran is demanding an immediate end to the U.S. naval blockade, full unfreezing of its assets, formal war reparations, and unhindered oil exports.

Washington, in response, wants Tehran to stop targeting commercial shipping on the Hormuz, and abandon any plans to collect transit tolls from passing vessels. U.S. President Donald Trump threatened on Monday to expand military strikes into Oman -- Iran's diplomatic ally and key regional mediator -- if Muscat facilitates Iranian actions on the waterway.