WTI at $111, Flips Above Brent on Iran Threats


   
Barani Krishnan
DTN Refined Fuels Market Reporter

   SECAUCUS, NJ (DTN) -- Oil futures prices resumed their rally Thursday (4/2) 
after a two-day reprieve, with WTI trading at a premium to Brent for the first 
time in four years, as the U.S. and Iran threatened further escalation in the 
five-week long Middle East conflict.

   With U.S. markets ending the week early ahead of the Good Friday holiday, 
the NYMEX WTI futures contract for May delivery closed up $11.42 at $111.54 
bbl. This was 11% higher than the prior session and 18% above last week.

   ICE Brent futures contract for June ended up $7.87 at $109.03 bbl, which is 
an 18% increase from Wednesday and a 1% gain on weekly basis.

   WTI's $3 premium over Brent came amid extreme backwardation in the time 
structures of the two benchmarks that reflected short-term supply concerns.  
May WTI front-month was about $7 bbl higher than June while June Brent was 
about $9 bbl above July.

   Among refined products, RBOB futures for May delivery advanced by $0.1966 to 
$3.2880 gallon. Front-month ULSD futures soared $0.3043 to $4.3611 gallon.  

   The US dollar index strengthened by 0.382 points to 99.84 against a basket 
of foreign currencies.

   U.S. President Trump escalated his military rhetoric against Iran on 
Wednesday (4/1), pledging to hit the country "extremely hard" and return it to 
the "Stone Ages." His televised remarks specifically targeted Iranian energy 
infrastructure for potential upcoming strikes.

   Iran, in response, identified infrastructure in Kuwait, Saudi Arabia and the 
UAE as military targets. It also claimed a cyber-strike on a cloud computing 
hub in Bahrain on Thursday.

   Since the outbreak of the Middle East conflict on February 27, Tehran has 
maintained a chokehold on the Strait of Hormuz, stranding about 20 million bpd 
of petroleum liquids.

   Iran has alternated between strikes and a murky vetting process to dictate 
tanker movements on the Persian Gulf's primary artery. Lloyd's List 
Intelligence has reported 23 direct attacks and 11 crew fatalities on the 
strait over the past five weeks.

   On Thursday, media reports said Iran and Oman, the two countries that border 
the Hormuz, were drafting a formal protocol to what analysts believe will be 
the first step towards a toll collection on the waterway. Until now, vessel 
movement has been untaxed in the region.

   Trump had previously warned Iran to free up the Hormuz, but in recent days 
said the strait was no longer a problem of the U.S., which gets only 10% of its 
oil from the Middle East.




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