Oil Futures Up as Houthis Rattle Sabre, UN Ceasefire Vote

Brian L Milne
By  Brian L. Milne , DTN Refined Fuels Editor

CRANBURY, N.J. (DTN) -- Nearest delivered oil futures on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange settled Monday's session higher, with gains by the crude and ULSD contracts boosted by heightened geopolitical worries while RBOB futures backed off a seven-month intraday high after testing key resistance.

West Texas Intermediate and Brent futures surged in morning trade following a 14-0 vote by the United Nations Security Council passing a resolution calling for a ceasefire in Gaza, with the measure passing as the United States abstained. The abstention is historic, with the U.S. up to Monday vetoing measures harmful to Israel in the UN, which has been openly hostile to the Middle East democracy. The U.S. abstention prompted Israel to cancel a delegation to the White House.

"Regrettably, the United States did not veto the new resolution, which calls for a ceasefire that is not contingent on the release of hostages," read a statement from the office of Prime Minister Benjamin Netanyahu. "Today's resolution gives Hamas hope that international pressure will force Israel to accept a ceasefire without the release of our hostages, thus harming both the war effort and the effort to release the hostages."

On Sunday, Houthi Supreme Political Council member Mohammed Ali al-Houthi warned Saudi Arabia that they or any other country that aligns with the United States or the United Kingdom would become a "legitimate target," according to Al-Monitor.

Saudi Arabia was in an active war with the Houthis in Yemen, located on its southern border, from 2015 until late 2022. Although not agreeing to terms for peace, both sides have refrained from hostilities.

Multiple reports note the U.S. Navy intercepted multiple maritime drones in the Red Sea launched by the Houthis over the weekend, while a Chinese commercial vessel was struck by Houthi-fired missiles despite assurances from the Houthis that Chinese and Russian shipping would not be targeted.

The Houthis, who are backed by Iran, have attacked commercial shipping in the Red Sea transiting through the Bab al-Mandeb chokepoint since October 2023 in support of Hamas, also an Iranian-funded terrorist group who viciously attacked Israeli citizens on Oct. 7. The attack led to the war in Gaza.

The Houthi attacks on shipping in the Red Sea region have prompted as much as 20% of the 8.5 million bpd of crude and oil products that traverse the key waterway to reroute around the Cape of Good Hope, adding 4,000 miles to the voyage, according to Wood Mackenzie. The disruption has added to shipping costs, stretched shipping capacity, and driven demand for marine bunker fuel higher.

NYMEX May West Texas Intermediate settled $1.32 higher at $81.95 bbl, trimming an advance to an $82.45 intraday high. ICE May Brent futures also rallied $1.32, settling at $86.75 bbl ahead of expiration Thursday afternoon. June Brent settled at $86.08 bbl.

NYMEX April ULSD futures gained $0.0252 on the session with a $2.6786 gallon settlement, with the May contract ending at a $0.0144 discount to the April contract which also expires at end-day Thursday.

NYMEX April RBOB futures settled up $0.0086 at $2.7484 gallon, paring an advance to $2.7711 -- the highest intraday value on the spot continuous chart since Aug. 31, 2023, after encountering resistance at the $2.7725 trendline for the uptrend from the December 2022 low. The May contract settled at a $0.02 discount to the expiring April contract.

Brian L. Milne can be reached at brian.milne@dtn.com.

Brian Milne