DTN Oil Update
Oil Begins September Higher on Renewed Hormuz Strikes
SECAUCUS, N.J. (DTN) -- Crude futures moved nearly 2% higher Tuesday morning as renewed military exchanges between Washington and Tehran stoked supply disruption fears.
By 9:10 a.m. EDT, NYMEX WTI crude for October delivery rose $2.43, or 2.86%, to $88.19 bbl. ICE Brent for November delivery moved up $2.23, or 2.43%, to $92.72 bbl.
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Downstream, NYMEX ULSD for October delivery climbed $0.1460, or 3.36%, to $4.5566 gallon. RBOB for October advanced $0.0543, or 1.72%, to $3.1313 gallon.
The U.S. Dollar Index moved up 0.175 points to 99.560 against a basket of currencies.
Crude futures' advance on the first trading day of September recouped most of their losses last week as escalated hostilities in the Middle East erased recent hopes for a diplomatic breakthrough.
Physical risks to regional energy infrastructure escalated Monday after two supertankers carrying Saudi crude were hit by unknown projectiles within minutes of each other in the Strait of Hormuz. Ship tracking data showed visible commodity transits through the chokepoint held at roughly five vessels on Monday, well below the 10-day average of 14.
None of the five vessels recorded transiting the waterway on Monday were liquid tankers, underscoring severe caution among commercial fleet operators.
Market participants caution that the sudden military escalation deals a blow to short-term prospects for establishing a safe, managed transit corridor through the strait.
President Donald Trump warned Monday, Aug. 31, of additional strikes against Iranian targets following the first direct military engagement between the two nations since late July. The escalation marks a sharp turn from last week, when the conflict briefly shifted toward economic sanctions and regional diplomatic talks.
Iranian President Masoud Pezeshkian stated Tuesday that Tehran would immediately return to its obligations if Washington honored commitments made under June's interim agreement. However, ongoing mediation efforts led by Qatar and Oman to reopen the Strait of Hormuz remain inconclusive.
Traders are expected to be focused later in the day on U.S. petroleum inventory data for the week ended Aug. 28 from the American Petroleum Institute, ahead of official statistics for the same period due on Wednesday, Sept. 2, from the U.S. Energy Information Administration.