DTN Oil Update
Oil Eases as Traders Assess Supply Risks, Sanctions Waiver
VIENNA (DTN) -- Oil futures retreated Monday morning after rallying Friday on the back of growing Middle East supply risks as escalating fighting in the region threatened a fragile oil supply recovery.
By 9:30 a.m. EDT, ICE Brent for December delivery was down $2.18 to trade near $107.68 bbl, and NYMEX WTI for November delivery fell $1.16 to $100.25 bbl.
Downstream, NYMEX ULSD for November delivery slid $0.0472 to $4.8519 gallon, and front-month RBOB futures retreated $0.0287 to $3.2067 gallon.
The U.S. Dollar Index steadied, down 0.008 points to 101.65 against a basket of foreign currencies.
Iranian forces have markedly intensified attacks on vessels attempting to traverse the Strait of Hormuz. Ship traffic has in reaction slowed down significantly, vessel tracking data showed. According to commodity intelligence firm Kpler, oil exports from the Persian Gulf averaged 8.5 million bpd last week, less than half of the average pace observed just the week prior.
On Sunday, an oil tanker exploded after striking a mine in the waterway. The incident highlighted the lack of navigational safety and put into question frequently repeated claims that the oil chokepoint has been cleared of mines. Mounting threats to shipping fueled concerns of a deepening crude oil supply disruption just weeks after flows had finally rebounded near pre-war levels.
The U.S., meanwhile, on Friday waived new sanctions on Russia just days before they were set to take effect. U.S. President Donald Trump, who last month signed the legislation passed by both chambers of Congress with bipartisan support, granted this 60-day suspension in an effort to ease retail fuel prices ahead of next month's elections. A week earlier, the Treasury suspended sanctions relating to Russian diesel exports after Trump announced he had struck a deal with the Kremlin that Russia will immediately supply the global market with 2.25 million bbl of diesel. Analysts, however, were largely skeptical that this additional supply will have a significant impact on prices. Question marks surrounding the country's ability to significantly ramp up exports as Ukrainian strikes have by now more than halved Russian refining capacity aside, the initial volume slated for October is equivalent to about 18 hours of U.S. diesel demand, or enough to meet less than two hours of global consumption.
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