Oil Prices Surge on U.S.-Iran Escalation, Tanker Hits


   
Karim Bastati
DTN Analyst

   VIENNA (DTN) -- Oil futures extended their rise Tuesday (7/14) morning as 
the U.S.-Iran conflict continued to escalate, including reciprocal strikes and 
Iranian attacks on two oil tankers in the Strait of Hormuz.

   By 08:30am ET, ICE Brent for September delivery was up $3.02 to trade near 
$86.32 bbl, and NYMEX WTI for August delivery rose $1.76 to $79.90 bbl.

   Downstream, NYMEX ULSD futures for August delivery advanced $0.1219 to 
$3.9455 gallon, and front-month RBOB futures rose $0.0788 to $3.2451 gallon.

   The US dollar index softened by 0.19 points to 100.85 against a basket of 
foreign currencies.

   Crude oil futures have over the past two trading days soared to a four-week 
high amid renewed supply concerns amid a crumbling U.S.-Iranian ceasefire. 
Brent's front-month contract was as of Tuesday morning up 14% from Friday's 
close. Diesel prices jumped even more, with ULSD for August delivery trading at 
an almost eight-week high.

   ADNOC, the United Arab Emirates' state oil company, on Tuesday claimed that 
three of its oil tankers were attacked by Iran as they were shuttling crude oil 
in the Strait of Hormuz with their transponders turned off.

   Shippers have reverted to sailing "in the dark" over the past few days after 
Tehran declared the Strait closed following a flare-up in U.S. and Iranian 
attacks. Ship tracking data showed visible crossings plummeting to a two-month 
low in recent days, but the volume of dark flows, particularly of Iranian oil, 
remained hard to gauge.

   Adding to supply concerns, the U.S. reinstated its blockade of Iranian ports 
after last week lifting a 60-day sanctions waiver on Iranian energy exports 
granted as part of the memorandum of understanding signed by both countries.

   The ongoing global refined products supply crunch, which is set to deepen 
from both Ukraine stepping up its attacks on Russian refineries and choked off 
flows from the Persian Gulf, has kept U.S. fuel inventories unusually depressed 
and prices sticky. The U.S. Energy Information Administration last week 
reported that nationwide gasoline stockpiles have fallen to a 14-year seasonal 
low 212 million bbl. Weekly inventory estimates by the American Petroleum 
Institute are scheduled to be released this afternoon, followed by official 
government data on Wednesday (7/15).




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