Oil Extends Rise on Mounting Tensions, Slowing Flows


   
Karim Bastati
DTN Analyst

   VIENNA (DTN) -- Oil prices climbed for a fourth day in early Wednesday 
(8/19) morning trade as oil flows through the Strait of Hormuz continued to 
slow amid new attacks on tankers and rising tensions between Iran and the 
United Arab Emirates. Prices, however, briefly reversed course in tandem with 
the US Dollar Index after the U.S. Treasury announced to at least double 
buyback operations for longer-dated securities.

   By 08:58am ET, ICE Brent for October delivery fell $0.09 to $90.93 bbl, and 
NYMEX WTI for September delivery dropped $0.14 to $84.80 bbl.

   Downstream, NYMEX ULSD futures for September delivery retreated $0.0303 to 
$4.4198 gallon, and front-month RBOB futures softened $0.0139 to $3.2878 gallon.

   Following the Treasury announcement, the US dollar index dropped to 99.05 
against a basket of foreign currencies, down 0.504 points.

   Vessel tracking data showed that crossings through the chokepoint remained 
in the single digits on Tuesday. Traffic has in recent days slowed markedly 
after Iran stepped up attacks on ships navigating the Strait without Tehran's 
approval. Before the start of the war in late February, daily transits averaged 
130.

   Following Iranian strikes on UAE-linked tankers and a refinery Tuesday, Abu 
Dhabi officially cut economic ties with Tehran, halting all trade and financial 
transactions. Iran in response again warned countries in the region not to 
provide assistance to U.S. armed forces.

   Several workarounds established over the past six months were able to ease 
the crude supply disruption stemming from the blockade of the Strait of Hormuz, 
including Saudi and Emirati pipelines diverting flows to ports outside the 
Persian Gulf, and shuttling oil onto tankers in the adjacent Gulf of Oman.

   Global supply of refined products, suffering from both the lack of Middle 
Eastern exports and months of crude-shortage-induced low refinery runs outside 
of the region, remained tighter than that of crude oil. Diesel inventories 
remained depressed, with U.S. refining margins for the fuel soaring to new 
records this week.

   According to U.S. Energy Information Administration (EIA) data, nationwide 
stockpiles of ultra-low sulfur diesel are trailing year-ago levels by 7.3% and 
the five-year seasonal average by 11.5%. The American Petroleum Institute on 
late Tuesday reported that distillate fuel oil inventories extended their 
decline by close to 2.8 million bbl last week. If confirmed by EIA data 
scheduled for release at 10:30am ET today, the draw would leave inventories 
8.2% lower than in the corresponding reporting week in 2025.




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