Oil Rally Halts on Steady Hormuz Situation, Iran Supply


   
Barani Krishnan
DTN Refined Fuels Market Reporter

   SECAUCUS, NJ (DTN) -- Crude prices fell as much as 5% Monday (3/16) after 
U.S. Treasury Secretary Scott Bessent said oil tankers were beginning to get 
through the Strait of Hormuz despite Iran's pledge to block the waterway for 
most of the Middle East's oil.

   U.S. President Donald Trump, meanwhile, said on Monday that U.S. and Israeli 
bombers had deliberately spared energy pipelines and infrastructure on Iran's 
Kharg Island, which houses a crude export system with a loading capacity of 7 
million bpd and storage exceeding 34 million bbl.

   "We are seeing more and more of the fuel ships start to go through," Bessent 
told a media interview, referring to the Hormuz, where 21 million bpd of 
petroleum liquids used to pass prior to the February 27 start of the Iran war. 
"The Iranian ships have been getting out already, and we've let that happen to 
supply the rest of the world. We've seen Indian ships go out now ... we believe 
some Chinese ships have gone out. That should start ramping up."

   Trump, who has asked NATO, China, Japan and other major oil consumers to 
help defend tankers on the Hormuz from Iranian attacks, told reporters that he 
wanted Iran's oil production estimated at 3 million bpd by OPEC to be preserved 
to aid the country's post-war reconstruction.

   Those remarks -- and news that the UAE's Fujairah port had commenced oil 
loading again after a drone strike that briefly disrupted the port's handling 
of approximately 1 million bpd of crude -- calmed an oil market that had 
rallied roughly 40% over the past 10 sessions on supply fears.

   At Monday's close, NYMEX WTI crude futures for April delivery settled down 
$5.21, or 5.3%, at $93.50 bbl. ICE Brent crude for May delivery finished down 
$2.93, or 2.8%, at $100.21 bbl.

   NYMEX RBOB futures for April closed down $0.0411 at $3.0003 gallon. ULSD for 
April retreated by $0.1772 to $3.8375 gallon.

   The U.S. Dollar Index was down 0.362 points to stand at a rounded up 100 
against a basket of currencies.

   Oil traders' attention could shift partly towards the U.S. Federal Reserve 
later in the week as its policymakers convene for a decision on interest rates 
on Wednesday (3/18) that comes amid similar action scheduled at the European 
Central Bank and a host of other central banks. The Fed is, however, expected 
to keep rates unchanged in a 3.5%-3.75% range.

   After 16 days of fighting that initially sent both WTI and Brent to nearly 
$120 bbl, conflicting outlooks on the duration of the Iran conflict have 
stalled the market's momentum.

   While Energy Secretary Chris Wright said on Sunday (3/15) that he 
anticipates a conclusion within the coming weeks, President Trump has 
emphasized that the campaign will proceed for as long as necessary to achieve 
total victory.

   Tehran, meanwhile, remains defiant, with new Supreme Leader Mojtaba Khamenei 
determined to use the Hormuz blockade as a strategic lever.

   To counter supply gaps, the Trump administration is weighing a temporary 
waiver of the U.S. Jones Act for shipping to boost domestic vessel availability 
for energy transport.

   Complementing these efforts, Bessent last week authorized a 30-day sanctions 
waiver to unlock Russian crude currently trapped at sea. Meanwhile, the U.S. 
and its international partners are moving to stabilize prices by releasing over 
500 million bbl of oil from strategic reserves.

    




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