DTN Oil Update
Oil Prices Rise as US Threatens Tougher Sanction on Iran
HOUSTON (DTN) -- Oil prices hit a three-week high on Thursday as fresh economic threats from Washington against Iran, further dimmed hopes of a ceasefire in the near term as global supply remains tight due to the blockade of the Strait of Hormuz.
Reuters reported on Thursday that U.S. Treasury Secretary Scott Bessent said the United States will impose "the toughest sanctions in history" on Iran, while urging Beijing to cooperate with Washington.
According to the report, Bessent said he would hold a press conference â??on Monday to discuss details on the measures.
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Meanwhile, U.S. President Donald Trump said in social media post on Wednesday, Aug. 19, that the U.S. would pursue "economic warfare and isolation" against Iran. He specifically mentioned oil smuggling, raising concerns that Iranian crude exports could face further declines as sanctions tightens.
Sanctions on Iranian oil trade, imposed since 2018, have dented Tehran's revenues but have largely failed to significantly reduce the country's oil exports. Ship tracking data suggest that flows were continuing even amid the U.S. naval blockade of Iranian ports, albeit at a trickle.
Trump also threatened economic consequences to every country not severing economic ties with or providing help to Iran.
The move stoked concerns over a prolonged status-quo, as economic pressure campaigns have in the past failed to bring Tehran to the negotiating table and given the long history of Iran's largest trading partners skirting U.S. sanctions.
If anything, Iran has during this now almost six-month long war repeatedly met perceived U.S. escalations with attacks on military and energy assets in the region.
The bullish sentiment on Thursday was also supported by federal data diesel inventories fell to their lowest in a month and were at their most depleted for the corresponding reporting week since August 1996.
Total crude stockpiles also receded despite a large surprise build in commercial inventories, as volumes in the Strategic Petroleum Reserve fell to their lowest since 1982, according to the most recent data reported by the Energy Information Administration.
The front-month NYMEX WTI futures contract climbed by $2.00 settle at $87.83 bbl, while ICE Brent for October delivery rose $2.01 to $93.63 bbl.
Downstream, NYMEX ULSD futures for September delivery rose $0.0318 to $4.4841 gallon, and front-month NYMEX RBOB futures contract increased $0.0199 to $3.2750 gallon.
The U.S. Dollar Index rose 0.079 points to 98.81 against a basket of foreign currencies.