DTN Oil Update
Oil Hits 2-Week High as US and Iran Trade War Rhetoric
SECAUCUS, N.J. (DTN) -- Crude futures hit two-week highs Monday as the U.S. and Iran traded hostile rhetoric after a weekend of military strikes within the United Arab Emirates and Lebanon that further complicated the outlook for the Middle East crisis.
Product futures rose as market participants expected higher fuel usage amid record travel anticipated for the Memorial Day holiday. Some 45 million people in the U.S. will travel at least 50 miles from home for the May 25 event, according to the AAA's forecast.
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NYMEX crude for June settled up $3.24, or 3%, at $108.66 bbl, after rallying to $ 108.70, its highest since April 30.
Brent crude for July was up $2.87, or 2.6%, at $112.13 bbl by 2:30 p.m. EDT after tapping a two-week high at $112.72.
Downstream, June NYMEX ULSD closed up $0.0611 at $4.1145 gallon, while front-month RBOB finished up $0.0587 at $3.7607 gallon.
The U.S. Dollar Index softened by 268 points to 98.94.
Fresh anxieties emerged in the Middle East conflict Sunday after the United Arab Emirates reported drone strike damages to a nuclear power plant, alongside additional interceptions by Saudi Arabia.
Regional authorities said they were investigating whether the aerial assaults originated directly from Iran or were launched by regional proxy groups. Simultaneously, Israel continued launching military strikes inside Lebanon despite a recent agreement that extended the fragile ceasefire for another 45 days.
U.S. President Donald Trump warned Iran in a social media post to conclude a peace deal or that nothing will remain of them. Tehran said it would respond with "full strength" and "new surprises for the enemy" attacking them.
Crude prices rose 7% last week amid dimming prospects for a quick end to the offensives, which have blocked some 20 million bpd that regularly pass through the Strait of Hormuz, creating what the International Energy Agency calls the worst supply disruption in history. The agency warns that rapidly depleting commercial inventories now cover only a few remaining weeks of total global oil demand.
Iran previously allowed brief transit through the strategic strait, before conditioning further diplomatic negotiations on the absolute cessation of Israeli operations in Lebanon. The U.S. military blockade choking off Iranian maritime trade, meanwhile, entered its fifth consecutive week on Monday.