Oil Set for Weekly Rise Even as New U.S. Tariffs Weigh


   
Karim Bastati
DTN Analyst

   VIENNA (DTN) -- Oil and product futures retreated from recent highs Friday 
morning (7/23) as the reimposition of U.S. tariffs fanned demand woes, but were 
still on track for sizable weekly gains.

   By 08:30am ET, ICE Brent for September delivery was down $3.16 to trade near 
$97.53 bbl, and NYMEX WTI for September delivery fell $2.70 to $89.49 bbl.

   Downstream, NYMEX ULSD futures for August delivery slumped $0.1136 to 
$4.2280 gallon, and front-month RBOB futures retreated $0.0971 to $3.3933 
gallon.

   The US dollar index edged lower by 0.016 points to 101.270 against a basket 
of foreign currencies.

   Oil prices have soared this week amid an escalating U.S.-Iran war and 
growing supply disruptions. On Friday, attention shifted to the demand side 
after the U.S. reinstituted import tariffs on most trading partners. The new 
duties ranging from 10 to 12.5% amplified concerns about economic growth, and 
about the additional inflationary pressure making interest rate cuts less 
likely.

   Despite this morning's slump, oil futures were still eyeing considerable 
weekly increases. Front-month Brent futures were up more than 9% on the week, 
the fourth consecutive weekly rise. Intensifying U.S. attacks on Iran, the 
de-facto closure of Strait of Hormuz, dimming peace prospects and the opening 
of a new front jeopardizing yet another vital oil shipping route had Brent 
breach the $100 bbl mark yesterday for the first time in two months.

   This week's attacks on Saudi tankers by Iran's allies in Yemen threatened to 
disrupt millions of bpd of crude supply rerouted from the locked-in Persian 
Gulf to Saudi Arabia's Red Sea port of Yanbu.

   Oil supply disruptions were also mounting outside of the Middle East. 
Ukrainian drone attacks on tankers loading in the Russian Black Sea port of 
Novorossiysk forced shut loading operations of Kazakh oil, affecting some 1.2 
to 1.5 million bpd in exports. The longer operations stay idle, the more 
Caspian Sea production will have to be curbed given the lack of alternative 
takeaway options and limited storage capacity.




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