Oil Rises, ULSD Soars as Market Assess Emergency Measures


   
Karim Bastati
DTN Analyst

   VIENNA (DTN) -- Oil and product futures rallied Wednesday (3/11) morning as 
tanker traffic through the Strait of Hormuz remained almost completely idle 
amid reports of Iran deploying sea mines in the vital oil chokepoint. Emergency 
release plans from strategic oil reserves kept gains in check.

   Members of the International Energy Agency are planning the coordinated 
release of 300 to 400 million bbl of crude oil from strategic reserves over a 
span of two months, amounting to 5 to 6.7 million bpd of supply, or about half 
of currently disrupted flows. A release of this size would be unprecedented and 
dwarf the 182 million bbl released in response to Russia's invasion of Ukraine 
four years ago. The IEA is set to come to a decision in a meeting scheduled for 
later today.

   Ongoing disruptions, meanwhile, have forced more oil producers in the Middle 
East to cut output. Gulf states have throttled crude oil production by a 
combined 6.5 million bpd so far. Most producers rely entirely on the Persian 
Gulf for oil exports, and Saudi Arabia's and the UAE's capacity to divert flows 
to ports outside are limited. Loadings at the Red Sea port of Yanbu in Saudi 
Arabia have doubled to more than 2 million bpd since the closure of the Strait 
of Hormuz. Given operational constraints at the port and the East-West 
pipeline's maximum capacity, analysts estimate that up to 4.5 million bpd could 
be shipped from the port. Saudi Aramco on Tuesday said its pipelines can move 
up to 7 million bpd to the Red Sea and up to 5 million bpd to the export market.

   Tapping strategic reserves and diverting exports to the Red Sea would 
alleviate some tightness in the crude oil market. However, some 5 million bpd 
of refined products, mostly middle distillates, also remained stranded in the 
Persian Gulf, where several refiners had to shut operations and plants were 
damaged by Iranian attacks and drone debris. This was reflected in futures 
prices: while Brent on Wednesday morning was trading 8% below Monday's closing 
price, ULSD futures surpassed it by 0.5%.

   At 9:05am ET, NYMEX WTI crude futures for April delivery were up $2.37 to 
trade near $85.82 bbl, and ICE Brent crude for May delivery advanced $2.63 to 
$90.43 bbl.

   Downstream, RBOB futures for April delivery climbed $0.1094 to $2.7497 
gallon, and ULSD futures soared $0.2925 to $3.6391 gallon.

   The U.S. dollar index strengthened by 0.245 points to 98.975 against a 
basket of foreign currencies.

   An official U.S. oil inventory report capturing the first week since the 
closure of the Strait of Hormuz is scheduled for release at 10:30am ET today by 
the Energy Information Administration. Market observers are expecting drawdowns 
to stocks, but the effects of the Middle East supply outage will likely take 
weeks before fully materializing.




(c) Copyright 2026 DTN, LLC. All rights reserved.