DTN Oil Update

Karim Bastati
DTN Analyst

VIENNA (DTN) -- Oil prices were mixed Friday morning, with crude benchmarks eyeing weekly declines in the 4% to 5% range, reflecting a shrinking geopolitical risk premium tied to the U.S-Iran war and rising oil flows from the Middle East.

By 8:35 a.m. EDT, ICE Brent for October delivery was down $0.42 to trade near $89.28 bbl, and NYMEX WTI for October delivery fell $0.79 to $82.74 bbl.

Downstream, NYMEX ULSD for September delivery advanced $0.0174 to $4.2691 gallon, and front-month RBOB futures rose $0.0407 to $3.4249 gallon.

The U.S. Dollar Index edged higher by 0.053 points to 99.145 against a basket of foreign currencies.

The U.S. completed its strategic pivot from a military pressure campaign to an economic one this week when Treasury Secretary Scott Bessent on Monday announced new sanctions on Iran. A muted response from Tehran, and the lack of anticipated secondary sanctions on Iranian trading partners, weighed on prices.

Signs of some crude flows circumventing Iran's blockade of the Strait of Hormuz, and productive negotiations between Iran and Oman to establish a joint shipping corridor in the Strait of Hormuz, also eased supply woes. Officials from both countries this week said that this shipping lane could start within the next 30 to 60 days.

Ship tracking experts did record a pickup in oil exports, with shippers relying on a combination of dark voyages in a U.S.-Navy protected corridor along the Omani coast, and crude flow diversions via pipelines and ship-to-ship transfers. Estimates vary however, ranging from one third to two thirds of pre-war volumes.

While crude futures moved lower, product futures shrugged off the increase in oil flows from the Persian Gulf amid tightening global fuels supply. War damages to refineries in the Middle East and Russia have taken offline a not insignificant chunk of global fuels production capacity. Over the past several months, intensifying Ukrainian attacks on energy infrastructure have impacted a cumulative 20 to 40% of Russian refining capacity. On Friday, Ukraine reported to have struck yet another Russian refinery overnight.