DTN Oil Update
Oil Extends Rise as Supply Risks Grow, Peace Prospects Dim
VIENNA (DTN) -- Oil prices extended their advance Friday morning on growing risks to Middle Eastern oil supply amid a recent escalation in fighting in the region. Brent futures were trading at their highest since early May and were on track for the third consecutive weekly increase.
By 9:10 a.m. EDT, ICE Brent for December delivery was up $1.90 to trade near $115.07 bbl, and NYMEX WTI for December delivery rose $1.94 to $101.41 bbl.
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Downstream, NYMEX RBOB for November delivery advanced $0.0307 to $3.2072 gallon, while front-month ULSD futures bucked the trend, retreating $0.0234 to $4.9087 gallon.
The U.S. Dollar Index steadied, up 0.04 points to 101.48 against a basket of foreign currencies.
Driving the rally was less acute physical supply disruption but rather mounting risks that the current recovery in crude flows from the region is standing on shaky ground. While this week's Houthi attacks on key Saudi Arabian infrastructure, including an oil field and the vital Red Sea port of Yanbu, failed to meaningfully hamper output, the deadly strikes highlighted the kingdom's seemingly limited means to protect core assets.
Adding to the risk premium were signs the U.S. may be preparing for a surge in fighting. The U.S. State Department this week issued an evacuation order for personnel from Saudi Arabia, and reports suggested that the administration was preparing to extend this order to other countries in the region. In addition, the New York Times on Wednesday reported that Israel and the U.S. were drafting plans for renewed military strikes on Iran following the midterm elections on Nov. 3.
Reciprocal strikes on energy infrastructure in the Russia-Ukraine war also continued this week. Russia has since the summer lost a significant portion of refining capacity to Ukrainian drone attacks, leading to regional fuel shortages and refined product export bans. Reports this week suggested that plant operators in Russia were holding off some repair work for as long as Ukrainian strikes continued unhindered, increasing the likelihood the global diesel crunch may extend far into 2027.
Despite domestic supply constraints, the first Russian diesel cargo bound for the U.S. since the White House waived sanctions on the country and the Kremlin in return lifted its diesel export ban departed Friday, according to media reports based on ship tracking data, and is expected to arrive in the U.S. in two weeks.
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