DTN Oil Update
Oil Climbs, ULSD Hits 4-Year High on Iran War Escalation
HOUSTON (DTN) -- Oil futures continued their upward trend Tuesday as the escalating U.S.-Iran conflict and the Trump administration's decision to withdraw a proposal for 20% fee charge on ships transiting the Strait of Hormuz. Front-month ultra-low sulfur diesel (ULSD) futures climbed to their highest levels in four years on expectations of tighter supplies and robust seasonal demand.
Crude oil futures have surged over the past two trading days to a four-week high as renewed concerns over supply disruptions followed the collapse of U.S.-Iranian ceasefire talks.
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A fresh rally on Monday lifted Brent's front-month contract 14% above from Friday's close.
Renewed air strikes near the Strait of Hormuz reignited fears about further supply tightness in the Middle East. ADNOC, the United Arab Emirates' state oil company, on Tuesday claimed that three of its oil tankers were attacked by Iran as they were shuttling crude oil in the Strait of Hormuz with their transponders turned off.
Shippers have reverted to sailing "in the dark" over the past few days after Tehran declared the Strait closed. Ship tracking data showed visible crossings plummeting to a two-month low in recent days, but the volume of dark flows, particularly of Iranian oil, remained hard to gauge.
Adding to supply concerns, the U.S. reinstated its blockade of Iranian ports after last week, lifting a 60-day sanctions waiver on Iranian energy exports granted as part of the memorandum of understanding signed by both countries.
The global refined products supply crunch is expected to deepen as Ukraine intensifies attacks on Russian refineries and disruptions to flows through the Persian Gulf persists, keeping U.S. fuel inventories unusually tight and prices elevated. The American Petroleum Institute Weekly is scheduled to release its weekly inventory estimates this afternoon, followed by official government data on Wednesday, July 15.
Last week, the U.S. Energy Information Administration reported that nationwide gasoline stocks fell to a 14-year seasonal low of 212 million bbl.
The NYMEX WTI futures contract for August delivery rose $1.50 to $79.64 bbl. Front-month ICE Brent futures contract climbed $1.97 to trade at $85.27 bbl.
Front-month NYMEX ULSD futures for August delivery rose $0.1993 to $4.0229 gallon, the highest level since June 29, 2022, when it was $4.0367 gallon. Meanwhile, the RBOB futures contract for August delivery rose $0.0622 to $3.2285 gallon.
In contrast, the U.S. Dollar Index dropped by 0.35 points to 100.695 against a basket of foreign currencies.