DTN Oil Update

Maria Eugenia Garcia
DTN Energy Editor

HOUSTON (DTN) -- Oil futures climbed over 5% on Tuesday after the United States launched new strikes against Iran raising concerns of a disruption to vessel traffic through the Strait of Hormuz.

Front-month NYMEX WTI crude futures contract climbed by $4.85, or 5.66%, to $90.61 bbl. ICE Brent for November delivery increased $4.62, or 5.11%, to $95.11 bbl.

Downstream, NYMEX ULSD for October delivery climbed $0.3013, or 6.83%, to $4.7119 gallon. RBOB for October advanced $0.0741, or 2.41%, to $3.1511 gallon.

The U.S. Dollar Index increased 0.260 points to 99.645 against a basket of currencies.

According to media reports, the U.S. Central Command accused the Islamic Revolutionary Guard Corps (IRGC) of attempting attacks on commercial vessels transiting through the key waterway and on "American service members deployed in the region." In response, the IRGC said the U.S. will face "severe punishment" for the strikes.

Global supply tightness is anticipated as the escalating hostilities in the Middle East have erased recent hopes for a diplomatic breakthrough and the full reopening of the Strait of Hormuz.

In the domestic market, investors and market participants await the U.S. petroleum inventory data for the week ended Aug. 28 from the American Petroleum Institute, ahead of official statistics for the same period due on Wednesday, Sept. 2, from the U.S. Energy Information Administration (EIA).

Last week, the EIA reported that commercial crude oil inventories increased by 100,000 bbl to 428.9 million bbl during the profiled week, essentially unchanged from the previous week, and were 10.6 million bbl, or 2.5%, above the same week last year. Meanwhile, Strategic Petroleum Reserve inventories fell by 3.7 million bbl to 289.7 million bbl during the reference week, extending their decline after falling to their lowest level since December 1982 the previous week. The current inventory represents about 40.6% of the reserve's total 714 million bbl storage capacity.