DTN Oil Update

Karim Bastati
DTN Analyst

VIENNA (DTN) -- Oil prices rose to their highest in more than three weeks Thursday morning amid dimming peace prospects and fresh concerns over Iranian oil supply as the U.S. and UAE ramped up economic pressure on the country.

By 8:30 a.m. EDT, ICE Brent for October delivery rose $3.00 to $94.62 bbl, and NYMEX WTI for September delivery on its last trading date advanced $3.17 to $89.00 bbl. The October contract rose $3.22 to $87.61 bbl.

Downstream, NYMEX ULSD futures for September delivery gained $0.0561 to $4.5084 gallon, and front-month RBOB futures inched up $0.0017 to $3.2568 gallon.

The U.S. Dollar Index continued to soften following Wednesday's 0.823-point slump, edging lower by 0.051 points to 98.680 against a basket of foreign currencies.

U.S. President Donald Trump on Wednesday in a social media post announced "economic warfare and isolation" against Iran. He specifically mentioned oil smuggling, raising concerns that sanctioned Iranian crude oil flows may ebb even further. Sanctions on Iranian oil trade, in place since 2018, had, while denting Tehran's purse, proven largely ineffectual in lowering the country's oil exports, and ship tracking data suggest that flows were continuing even amid the U.S. naval blockade of Iranian ports, albeit at a trickle.

The president also threatened economic consequences to every country not severing economic ties with or providing help to Iran. The move stoked concerns over a prolonged status-quo, as economic pressure campaigns have in the past failed to bring Tehran to the negotiating table, and given the long history of Iran's largest trading partners skirting U.S. sanctions. If anything, Iran has during this now almost six-month long war repeatedly met perceived U.S. escalations with attacks on military and energy assets in the region.

U.S. oil inventory data also lent price support. The Energy Information Administration on Wednesday reported that diesel inventories fell to their lowest in a month, and were at their most depleted for the corresponding reporting week since August 1996. Total crude stockpiles also receded despite a large surprise build in commercial inventories, as volumes in the Strategic Petroleum Reserve fell to their lowest since 1982.