Oil Rallies on Fresh US-Iran Fighting
by Bloomberg | M. Gindis, C. Gorrivan, P. Burkhardt
click here to read this article at Rigzone.com
*this article was not written by Roseland Oil & Gas
Oil rose sharply as renewed US-Iran fighting heightened concerns about shipping through the Strait of Hormuz.
Oil rose the most in three weeks as tensions spiked in the Middle East, with the US and Iran exchanging strikes for the first time in about a month and fighting appearing poised to continue.
West Texas Intermediate futures rose 2.8% to settle near $86 a barrel after American forces hit an island in the Strait of Hormuz and the Islamic Republic responded by launching attacks on the United Arab Emirates and Jordan. The skirmishes fueled concerns that a prolonged military escalation could further disrupt shipping through Hormuz, the world’s most important energy chokepoint.
Crude futures are wrapping up another volatile month, with US benchmark WTI swinging in a range of almost $15 a barrel. Prices are up about 50% this year, buffeted by stop-start efforts to end the war and threats of tougher economic pressure, including US Treasury Secretary Scott Bessent’s pledge to step up efforts to cripple Iran’s economy.
Traders closely watched the latest tit-for-tat fighting in the Middle East on Monday. US Central Command, which oversees military operations in the Middle East, said it fired on Islamic Revolutionary Guard Corps forces after they were seen preparing to deploy mines into Hormuz. Iranian media said separately that an unidentified supertanker attempting to navigate the waterway was hit by two mines, though US Central Command said no ships had been hit.
Last week, a top US military commander said American forces had “quietly” removed all Iranian mines from international shipping lanes in Hormuz after Washington allies expressed doubt that the strait was clear.
As part of its economic offensive, the US has maintained a naval blockade of Iran’s ports, curbing the nation’s oil exports. Still, about 6 million to 8 million barrels a day of crude, mostly from other Gulf producers, are being shipped through the world’s key oil chokepoint, according to traders monitoring cargoes.
Those flows have helped keep prices in check even as the trajectory of the war remains uncertain. Current and former US and Iranian officials have said they expect the conflict to stretch on for months, with neither side able to break the deadlock.
“The key is to watch the barrels, and as long as they continue to flow through the Strait of Hormuz, the buying appetite in the market remains muted for fear of being caught out,” said Ole Hansen, head of commodity strategy at Saxo Bank.
Traders are also weighing the implications of a fresh deal that would allow the US to take majority control over a huge amount of Venezuela’s oil wealth. The White House hasn’t explained where the $100 billion in expected investment for the deal is supposed to come from, with President Donald Trump saying it won’t be from taxpayers.
Bloomberg earlier reported the venture would have 100-year concessions for oil fields totaling about 65 billion barrels of proven reserves.
Oil Prices
- WTI for October delivery gained 2.8% to settle at $85.76 a barrel in New York.
- Brent for November delivery traded 1.3% higher to settle at $90.49 a barrel.
The US-Iran conflict, as well as the war between Russia and Ukraine, has lifted prices of oil products, especially diesel. In a bid to subdue domestic energy costs, the Trump administration granted oil refineries the biggest amount of exemptions from mandates requiring them to blend renewable fuels since 2017. Average retail diesel costs have rallied 57% this year, according to the American Automobile Association.
“Rising strikes on refineries in the Middle East and Russia have further constrained already-stretched global refining capacity,” Goldman Sachs Group Inc. analysts said in a note. The bank more than doubled estimates for US and European diesel margins over Brent to $63 and $49 a barrel in 2027.
by Bloomberg | M. Gindis, C. Gorrivan, P. Burkhardt
click here to read this article at Rigzone.com
*this article was not written by Roseland Oil & Gas